Britannia Industries - The Expensive Multibagger

On 27th May 2011 we recommended Britannia Industries (See article here: Ting Ting Tding) at Rs.391 in-spite of being expensive (35 time PE multiple) at that time. Prima facie the stock was expensive on PE front but the growth was cheap as the company was growing at very high pace. Guess what? the stock is still expensive today and is up more than 250% from the recommended price. Closing price of Britannia Industries as on 1st Nov was Rs.940

Fundamentally the company has done exceptionally well with sales and net profit up around 40% and 60% respectively between FY-11 and FY-13 (See charts below). High brand value and size of opportunity for its products across rural india is keeping the stock expensive which is now trading at a PE multiple of 50 times FY-13 EPS. Rise in EPS and further appreciation in PE multiple made the stock multi-bagger.

So what should you do with the stock now?

Ting Ting Tding

Yes we are talking about Britannia Industries. The company has posted good growth of 30.19% in its consolidated net profit for the year ended March 31, 2011 at Rs 134.34 crore against 103.18 crores in FY10. The company's net sales for the 12 months ended March 31, 2011 increased 22.05% at Rs 4,605.16 crore as against Rs 3,772.91 crore in 2009-10. The board has recommended a dividend of Rs. 6.50 per share.

The company has strong brand value which will drive its growth in future. At the CMP of Rs. 391 the stock is trading at a