"Britannia emerges winner over peers" Consumer Sector: Essentials - Q1FY21 Post Earnings Review
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“Britannia emerges winner
over peers”
Consumer Sector: Essentials
Q1FY21 Post Earnings Review
30th July 2020Table of Contents
1 Q1FY21 Earnings Summary – Key Takeaways 4
2 Earnings Review: Result Summary 5 - 10
3 Valuation Snapshot 11 - 15
4 Performance Overview 16 - 21
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Thomson Reuters, Factset and Capital IQCoverage Companies
Essentials
• Hindustan Unilever Ltd
• ITC Ltd
• Britannia Industries Ltd
• Nestle India
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Thomson Reuters, Factset and Capital IQQ1FY21 Earnings Summary – Key Takeaways
Food & Hygiene segment outperform other discretionary businesses
• Britannia emerges winner, while Nestle misses the boat; HUL and ITC perform in Food segment
o Britannia reported highest revenue growth of 26.7% YoY, while flat growth of Nestle India was due to delay in resolving supply disruptions
o HUL and ITC displayed growth in the Food & refreshment segment. While, both HUL and ITC has ~28% share in the food & refreshment
business, the growth was higher for HUL mainly due to merger impact of GSKCH
o Discretionary segment such as cigarette and hotel segment for ITC; and Beauty & Personal care segment for HUL were majorly impacted
• Pressure on operating margin highest for ITC, while others leverage on reducing discretionary spends
o Britannia & Nestle reported expansion in EBITDA margin due to reduction in other expenses and rationalization of discretionary and
advertisement spends
o However, HUL & ITC reported contraction in operating margins on a YoY basis; Margin contraction was higher for ITC on account of hike in
NCCD, while for HUL the contraction was mainly due to higher prices of raw materials, offset by synergies obtained through GSKCH merger
• Recovery in capacity utilization to aid normalization of operations; Ramping up capacities to suit demand
o Capacity utilization, which suffered in March and April due to lockdown, improved in May and June with most companies operating at pre-
COVID levels currently
o HUL has ramped up capacity for sanitizers by 100x and for hand wash by 5x while Britannia has planned fresh capex of INR 700 Cr for its
bakery line of products; Britannia will also be launching salty snacks in next 4-6 months to cash in on the surge of in-house consumption
• Shift towards value packs and low-price products and innovations
o Both ITC and HUL have launched several products in the food and hygiene space in value packs to cater to rural market; ITC launched
Savlon Hand Sanitizer Sachet, while HUL launched pouch packs of Horlicks and Boost. In the food space, Britannia has launched INR 5 layer
cake
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Thomson Reuters, Factset and Capital IQQ1FY21 Earnings Review: Result Summary …(1/6)
Companies Revenue and Segment-wise Performance
• Total revenue declined by 17.4% YoY / 16.8% QoQ to INR 9,502 Cr due to disruption in lockdown; Decrease was due to decline
in cigarette and hotel segment partly offset by growth in FMCG and Agri segment
Segment-wise Performance:
• Segment Contribution:
o Q1 FY21: Cigarette 32%; FMCG 28%; Agri 31%; Paper Board 9%; and Hotel 0.2%;
o Q1 FY20: Cigarette 38%; FMCG 21%; Agri 25%; Paper Board 11%; and Hotel 3%
ITC Ltd. • Q1 FY21 Performance
o Cigarette declined by 29% YoY due to lockdown and rapid volume growth of lightly taxed illicit cigarettes
o FMCG segment increased 10% YoY due to high demand for convenience foods and health and hygiene products
o Hotel segment declined by 94% YoY due to severe restrictions on travel during lockdown period
o Agri segment increased by 4% YoY driven by trading opportunities mainly in oilseeds and rice
o Paper board and packaging segment declined 33% YoY largely on account of lockdown
• Revenue grew 4.4% YoY (+17.2% QoQ) at INR 10,560 Cr. led by growth in Food & refreshment segment offset by weak
performance in Home care segment and Beauty & Personal care segment
Segment-wise Performance:
• Food & Refreshment segment (~28% of revenue) stood out among all segments with a growth of 51.7% YoY . Growth was
mainly propelled by surge in in-home consumption for immunity products, foods, tea and coffee and GSKCH merger impact
HUL • Home care segment (~32% of revenue) declined 2.1%YoY, mainly impacted due to weak performance of Water purifier
segment while Fabric wash and Domex delivered well
• Beauty & Personal segment (~38% of revenue) declined 12% YoY due to weak performance of discretionary products such as
skin care, colour cosmetics and Deo, however sanitizers/soaps like Hamam/Lifebuoy performed well and company has
stepped up capacities in both handwash and hand sanitizers to meet the consumer demand
• Revenue increased by 26.7% YoY (+19.3% QoQ) at INR 3,421 Cr backed by higher market demand for biscuits driven by
Britannia
increased home consumption in the wake of COVID-19
Industries
• Segment-wise Performance: All adjacent businesses along with biscuit segment delivered a healthy profitable growth
• Reported flat revenue growth YoY (down 8.3% QoQ) due to COVID 19 induced lockdown leading to production disruption
across factories. Demand in Out of Home channel too was severely reduced
Nestle India • Segment-wise Performance: Higher in-home consumption boosted the sales of EVERYDAY Dairy Whitener, Nestle a+ Milk,
NESCAFE Classic and NESCAFE Sunrise, all of which performed well this quarter. MAGGI also witnessed solid growth towards
the end of the quarter after initial supply constraints
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Thomson Reuters, Factset and Capital IQQ1FY21 Earnings Review: Result Summary …(2/6)
Companies Margin Performance
• Gross margin stood at 52.3% in Q1FY21 as compared to 64.0% in Q1FY20 due to higher raw material cost, majorly
tobacco leaves; and increase in excise duty as a result of hike in NCCD taken in budget
ITC Ltd. • EBITDA margin contracted 1184bps YoY (down 860 bps QoQ) to 27.9% due to negative operating leverage from
unfavorable product mix in segments such as Hotel, Paperboard and cigarette offset by improved performance in
FMCG segment
• Net Profit margin contracted 294 bps on YoY and 859 bps on QoQ basis to 24.7%
• Gross margin contracted 222 bps YoY/190 bps QoQ due to higher cost of raw materials mainly crude oil, tea, palm oil,
tomato paste and skimmed milk powder
HUL • EBITDA margin contracted 113 bps YoY to 25% in Q1FY21 due to increase in employee cost (due to GSKCH merger) and
other expenses, offset by decline in advertising/promotion expenses as percentage of sales; cost savings and
unlocking of synergies of GSKCH merger also supported margin
• Net Profit margin expanded 46 bps YoY to 17.8% due to lower taxation rate
• EBITDA margin expanded 634bps YoY/+512 bps QoQ to 21.0% in Q1FY21. The company witnessed moderate cost
inflation in the price of key raw materials
Britannia Industries • Other expenses to sales stood at 16.7% in Q1FY21 compared to 21.3% in Q1FY20 and 19.6% in Q4FY20 on the back of
cost efficiencies
• Net Profit margin for the quarter expanded 608bps YoY to 16.0% (+288bps QoQ) from 9.9% in Q1FY20 on the back of
lower taxation rate at 26.4% compared to 36.5% in Q1FY20
• Gross margin was impacted due to higher cost of raw material particularly milk prices
Nestle India • Overall, EBITDA margin expanded by 76bps YoY to 24.5% (+65 bps QoQ) mainly due to decline in other expenses due
to reduction in marketing spend and other overheads
• Net Profit margin for the quarter expanded 136 bps YoY to 16.0% (+15bps QoQ) on the back of lower taxation rate
KRChoksey Research
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Thomson Reuters, Factset and Capital IQQ1FY21 Earnings Review: Result Summary …(3/6)
Companies Industry/Outlook/ Strategy New Launches/Market share
• Significant gap in duty would continue to impact • Cigarette segment: Gold Flake Luxury filter in the Longs segment, and
cigarette volume growth going forward Navy Cut Deluxe Filter, Gold Flake Indie Mint and Capstan Fresh in the
• Biscuits saw continued strength in demand in the regular size filter segment were launched during the quarter
first two weeks of July, but the momentum has • Within FMCG segment, launched eight variants of frozen foods and the
now slowed down industry-wide range was extended to 70+ cities; Aashirvaad Svasti Lassi was launched
ITC Ltd. • As per management, hotel sector will see near within the Dairy business while 2 innovative immunity drinks was
term pressure; however, it holds immense launched within the “B Natural” range of juices
potential in view of the robust long-term economic • Within the health and hygiene segment, ‘Savlon Surface Disinfectant
and tourism prospects of the country Spray’, ‘Savlon Hexa’ hand sanitizing liquid, ‘Savlon Germ Protection
Wipes’, Savlon Hand Sanitizer Sachet, and ‘Savlon Hexa advanced’ Soap.
‘Nimwash’ - Vegetables and Fruit Wash Liquid was also launched
• GSKCH merger completed on June 25 is expected • Immunity boosting Horlicks with added Zinc was launched during the
to derive significant synergies going forward quarter. The company also launched pouch packs of Horlicks and Boost
• Skimmed Milk Powder prices have softened, while • Also launched 50 innovative product in health and hygiene segment like
vegetable oils trend is upwards. Company expects Lifebuoy germ spray, sanitizers, domex disinfectant spray
to pass on increase in crude oil prices to consumers • Domex’s credentials of destroying Coronavirus in 60 seconds is picking
HUL
while taking a gradual increase in tea prices up well with consumers
• Company has ramped up production of essential • HUL has witnessed volume/value market share gains in 80% of its
products such as hand wash, sanitizer and floor portfolio
cleaners. For sanitizers it has ramped up capacity
by 100x and for hand wash by 5x
• Expansion in margin is likely to continue in FY21, • Launched ‘Winkin Cow Lassi’ and a layer cake pack of INR 5
driven by benign raw material cost and • Britannia gained market share, driven by aggressive execution, early
rationalization in ASP spend mover in starting factories vs peers and getting back distribution to pre-
Britannia
• Distribution expansion especially in Hindi heartland COVID levels
Industries
to further drive volumes in the medium term
• Planned fresh capex of INR 700 crores over the
next 3 years for bakery products
• Delivered strong performance in the ‘e-commerce’ • No new launches
Nestle India channel which grew by 122% this quarter and now • All its eight factories are operating at pre-COVID levels
contributes 3.6% to domestic sales
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Thomson Reuters, Factset and Capital IQQ1FY21 Earnings Review: Result Summary …(4/6)
Hindustan Unilever Ltd : Conference Call Key Takeaways
• HUL witnessed recovery on MoM basis in May and in June compared to April. According to the management, the outlook on
growth continues to remain uncertain due to increasing number of COVID cases and implementation of localized and vertical
lockdowns in July.
• Management expects rural to perform better than urban, however it also remains cautious on the sustainability of rural growth as
number of cases are on the rise that could lead to intermittent lockdowns.
• GSK Consumer portfolio contributed ~10% of total revenues and grew by 5% YoY in Q1FY21 driven by both volume and value share
gains. The company sees a double-digit growth potential in the medium term.
• The management stated that it is difficult to ascertain demand at the end-consumer level and will be able to determine underlying
demand trend once supply is normalized and trade pipeline is filled up, by Q2FY21.
• The company will not be shifting focus to categories like biscuits, which have a high demand in the current scenario.
• Consumers are shifting towards low price points. Management is of the opinion that shifting towards value products will continue
if the economy does not pick up.
• Urban market has been impacted much more than rural due to stricter implementation of lockdown. The company hasn’t seen any
major revival
in rural growth rate yet but is seeing some improvement.
• The Shikhar app is available in more than 150,000 stores. The app saw doubling of order value as compared to pre-COVID levels.
• Distribution pipeline that was lost in March was re-gained in June. E-commerce and groceries are the two channels that have done
very well. Modern trade (MT) suffered as malls were shut down.
• The GSKCH nutrition business started off well with 5% growth in Q1FY21 and performed better than the industry growth with
volume share gain.
• The company is currently operating at 50% of SKUs of pre-COVID level and will increase upto 80% gradually.
• HUL’s other segments are likely to benefit from GSKCH’s strong exposure to pharmacy and chemists, mainly the Beauty & Personal
care segment. South and East markets present a very good opportunity for the portfolio.
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Thomson Reuters, Factset and Capital IQQ1FY21 Earnings Review: Result Summary …(5/6)
ITC ltd : Press Release Key Takeaways
Cigarettes:
• Currently, all factories are operational, and production has been scaled up to pre-COVID levels. Sales & distribution operations have
normalized
• Discriminatory taxation on cigarettes, has caused progressive migration from consumption of duty-paid cigarettes to other lightly
taxed/tax-evaded forms of tobacco products, comprising illegal cigarettes and bidi, chewing tobacco, Gutkha, Zarda, snuff, etc.
Hotels:
• The Business resumed operations from the second week of June 2020.
• ITC Hotels launched ‘Flavours’ and ‘Gourmet Couch’ menus as home delivery and takeaway offerings. The Business also partnered with
food delivery platforms ‘Zomato’ and ‘Swiggy’ to enable wider availability of the offering.
• Negative operating leverage weighed on segment profits; aggressive reduction in controllable fixed costs partially mitigated the impact.
FMCG:
• The Branded Packaged Foods Business delivered a strong performance, driven by Atta, Noodles, Biscuits and Fresh Dairy.
• With the multi-modal procurement & supply chain model , the Business was able to ramp up the volume of wheat procurement
substantially to cater to the surge in demand for Aashirvaad atta.
• During the quarter, the Business also ramped up the direct milk sourcing network in West Bengal to cater to the increasing requirements
on the back of the growing franchise of the Aashirvaad Svasti range of dairy products.
• The ‘ITC Master Chef’ range of Frozen Snacks posted robust growth in the retail channel.
• 'Engage' range of fragrance products saw significant decline in demand.
Paper Packaging:
• Demand for paperboards and packaging from Pharma and FMCG end-user customer segments was relatively stable, but subdued offtake
was seen in certain segments (e.g. liquor, cupstock, tobacco, hosiery) and significant adverse impact in others (such as publications,
décor, wedding cards etc.) impacted operational performance
• The demand for writing and printing paper has also been impacted due to closure of educational institutions and offices in the wake of
the pandemic.
Agri business:
• Revenue growth was driven by trading opportunities in oil seeds and rice. The business leveraged e-choupal network to meet the surge in
wheat requirements for Aashirvaad atta.
• Subdued demand for leaf tobacco in international markets and adverse business mix weighed on margin.
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Thomson Reuters, Factset and Capital IQQ1FY21 Earnings Review: Result Summary …(6/6)
Britannia Industries : Conference call Key Takeaways
• The management prioritized sale of premium segment products such as Good Day, Milk Bikis, Marie and Digestive Milky
Choice during the first 2 to 2.5 months.
• Distributor attrition was at an all time low due to higher returns . The number of rural distributors increased to 22,ooo in June
and direct distribution outlets have increased to 21.5 lac outlets (vs 21.0 lac in Q1FY20)
• The company launched Winkin Cow Lassi in 2 flavours and a layer cake for INR 5, both of which has received good response
from the market.
• Group ICDs are within limits approved by the board and is in the same range of total investments. Currently, they are valued at
INR 600 crores.
• In the long term, dairy will be a priority and in about 20 months, the company will be in a good position to start commercial
production.
• Traditional channel has seen a growth of 30% and e-commerce has grown by 300%, however modern trade has been hit hard as
stores are not up and functioning in a lot of areas and trade operators have been under stress.
• The company earlier had a stock of about 11 days i.e. 40,000 tonnes, however today they do not have a stock of more than 3
days.
• The Company expects to see a double-digit growth for the next 2-3 quarters.
KRChoksey Research
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Thomson Reuters, Factset and Capital IQValuation Snapshot …(1/5)
Earnings visibility and recent price correction makes the sector our top pick
CMP Target Price
Stock Recommendation Upside (%)
(INR) (INR)
Hindustan Unilever BUY 2,231 2,556 15%
ITC Ltd BUY 197 228 16%
Britannia Industries BUY 3795 4,356 15%
Nestle India BUY 16,598 19,088 15%
Source: Bloomberg, KRChoksey Research
*Prices are taken as of 29th July 2020
KRChoksey Research
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Thomson Reuters, Factset and Capital IQValuation Snapshot …(2/5)
Hindustan Unilever Ltd : Investment Rationale
HUL delivered a moderate set of numbers in Q1FY21 led by growth in food & refreshment segment on the back of
increased surge in in-home consumption. However, amidst COVID-19 disruptions and weak consumer demand
environment, the discretionary segment took a hit. However in the long term, superior branding and the company’s
focus on innovation and market development, high rural mix and strong distribution channel should help HUL in
achieving sustainable volume and value growth going forward compared to its peers along with strong liquidity
position to help weather the turbulent times. The recent merger with GlaxoSmithKline Consumer Health care will help
propel its growth prospects by housing well established brands such as Horlicks, Boost; while simultaneously
providing synergy benefits. Margin is also likely to improve on the back of benign raw materials in the near term.
We expect Revenue/PAT CAGR of 11.3%/16.6% between FY20-FY22E respectively. Since our last ‘BUY’ recommendation
on 04th May 2020, the stock has rallied 7%. We assign a P/E multiple of 65x (to reflect the resilient nature of the
business amid COVID-19 and benefits derived from GSKCH merger) to the FY22E EPS of INR 39.1 to arrive at a target
price of INR 2,556 per share; an upside of 15% over the CMP. Accordingly, we reiterate our “BUY” rating on the shares
of Hindustan Unilever Ltd.
KRChoksey Research
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Thomson Reuters, Factset and Capital IQValuation Snapshot …(3/5)
ITC Ltd: Investment Rationale
ITC Ltd.’s Q1FY21 result was impacted due to COVID-19 owing to higher share in discretionary products, mainly
cigarette business due to lockdown and high pricing gap with illegal cigarettes. We expect the cigarette
business to revive in the future with strict regulation from government on curbing the sale of illegal cigarettes.
However, with its strong liquidity position and a debt free balance sheet, the company is able to withstand any
future impact of COVID-19. ITC with diversified operations across non-cyclical sectors, a resilient business
model, strong brand leadership position in cigarette business, product innovation track record &
premiumization drive is establishing itself as a FMCG major. Despite the ongoing COVID-19 related slowdown,
we see recovery signs in recent months and the current valuation attractive.
We take a conservative stance to value ITC shares using an SOTP (Sum of the parts) approach implying 9.1x
EV/EBITDA on FY22E to Cigarette business (earlier 10.0x on FY21E); 12.5x EV/EBITDA on Hotel segment (earlier
18.0x on FY21E); an average 5.5x EV/EBITDA on Agri/Paper business (earlier 5x on FY21E); and 6.4x on
EV/Revenue on FMCG segment (earlier 6.8x on FY21E) - to arrive at a revised target price of INR 228 per
share; an upside of 16% over the CMP. Accordingly, we reiterate a “BUY” rating on the shares of ITC Ltd.
KRChoksey Research
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Thomson Reuters, Factset and Capital IQValuation Snapshot …(4/5)
Britannia Ltd: Investment Rationale
Britannia reported strong results in Q1FY21, better than expectations, backed by the essential nature of its
products. Britannia presently seems to be in a sweet spot with gain in market share, moderation in key
commodity prices, cost cutting initiatives and high demand for packaged products. With lockdown easing and
supply distribution smoothening, we expect Britannia to further continue its streak of delivering strong
numbers in the next few quarters considering its strong market position, deepening of the distribution
channel and efforts taken for recovery in rural segment. Considering strong performance in June quarter and
further capex of INR 700 Cr in bakery, over and above greenfield capex in dairy business, we have revised our
estimates upwards for FY21E/FY22E by 7.7 %/11.5% respectively. We expect overall Revenue/EBITDA to increase
at a CAGR of 10.2%/16.1% for the year FY20/22E on account of leadership and strong brand image of the
company against its peers, while profit is expected to increase at an average of 16.7% for FY20/22E.
We assign a P/E multiple of 54x to the FY22 EPS of INR 79.5 (earlier 56x on FY21E EPS of INR 72.2) to arrive at a
target price of INR 4,356 per share; an upside of 15% over the CMP. Accordingly, we reiterate a “BUY ” rating
on the shares of Britannia Industries .
KRChoksey Research
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Thomson Reuters, Factset and Capital IQValuation Snapshot …(5/5)
Nestle India Ltd: Investment Rationale
Nestle India reported weak numbers as compared to its peer (Britannia) considering the opportunity it lost
during the current surge in the in-home consumption segment. However, now that the company has improved
its supply chain , we expect the growth momentum to continue in the near term, especially for its ready to
cook products such as Maggi, Nescafe, Everyday milk products. With stability in raw material prices,
particularly milk and cost cutting measures undertaken, we believe margin to sustain going forward. We
expect the topline to grow by 10.5%/9.8% in CY20E/CY21E and PAT to increase by 18.9%/11% in CY20E/CY21E.
Overall we remain positive on the back of resilient business, strong brand presence with diversified product
mix and high ROE.
We apply a P/E multiple of 71x on CY21E EPS of INR 270 to reflect the continued strong growth and resilience
amid COVID-19 to arrive at a target price of INR 19,088 per share; an upside potential of 15% Since our last
ACCUMULATE recommendation (13th May, 2020), the stock price has fallen by ~5% Due to higher room for
upside, we revise our rating to “BUY” on the shares of Nestle India.
KRChoksey Research
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Thomson Reuters, Factset and Capital IQPerformance Overview …(1/6)
ITC has a better margin profile compared to its peers
Particulars (INR Cr) HUL ITC Britannia Nestle India
Sales 10,560 9,502 3,421 3,051
Total Expenditure 7,916 6,855 2,704 2,303
Cost of Raw Materials 3,575 3,048 1,776 1,194
Purchase of Stock 1,686 1,677 196 42
Changes in Inventories -174 -778 24 96
Excise duty 0 590 0 0
Employee Cost 592 697 137 370
Other expenses 2,237 1,621 571 601
EBITDA 2,644 2,647 717 748
EBITDA Margin (%) 25.0% 27.9% 21.0% 24.5%
Depreciation 242 398 48 92
EBIT 2,402 2,248 669 655
Interest Expense 29 17 26 41
Other Income 156 897 94 38
PBT 2,529 3,128 737 652
Exceptional Items -118 0 0 0
Tax 530 786 194 166
PAT 1,881 2,343 546 487
PAT Margin 17.8% 24.7% 16.0% 16.0%
Source: Company, KRChoksey Research
KRChoksey Research
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Thomson Reuters, Factset and Capital IQPerformance Overview …(2/6)
Britannia outperformed its peers in topline growth owing to the nature of its product offerings
Particulars HUL ITC Britannia Nestle India
Change % QoQ YoY QoQ YoY QoQ YoY QoQ YoY
Sales 17.2% 4.4% -16.8% -17.4% 19.3% 26.7% -8.3% 1.7%
Total Expenditure 14.0% 6.0% -5.5% -1.2% 12.0% 17.3% -9.0% 0.6%
Cost of Raw Materials 49.6% 13.1% -6.3% -1.6% 30.3% 29.8% -19.5% -1.9%
Purchase of Stock -15.7% 26.5% 69.8% -7.7% -22.9% -25.2% -39.6% -19.6%
Changes in Inventories -20.9% -213.0% 346.1% 0.4% -78.6% NM NM NM
Excise Duty NA NA 2.2% NM NA NA NA NA
Employee Cost 66.8% 31.0% 4.6% 1.0% 13.3% 13.6% 3.1% 17.9%
Other expenses -7.6% -5.5% -16.7% -23.1% 1.5% -0.9% -16.5% -16.8%
EBITDA 28.0% -0.1% -36.4% -42.0% 57.8% 81.7% -5.8% 4.9%
EBITDA Margin (%) 212 bps -113bps -860 bps -1,184 bps 512 bps 634 bps 65 bps 76 bps
Depreciation -5.1% 13.1% 1.4% 10.9% -1.1% 7.1% 1.2% -1.8%
EBIT 32.7% -1.3% -40.4% -46.6% 64.9% 91.2% -6.7% 5.9%
Interest Expense 11.5% 20.8% 14.0% 10.3% -5.1% 153.6% -0.4% 27.3%
Other Income -41.4% 6.1% 18.7% 44.6% 19.2% 38.9% -11.5% -47.7%
PBT 23.4% -1.1% -30.7% -35.0% 61.2% 88.2% -7.3% -1.0%
Exceptional Items 103.4% -1785.7% NA NA NA NA NA NA
Tax 12% -34.4% 9.9% -52.0% 128.9% 35.9% -7.1% -25.1%
PAT 23.8% 7.2% -38.3% -26.2% 45.6% 117.4% -7.4% 11.1%
PAT Margin 96 bps 46bps -859 bps -294 bps 288 bps 665 bps 15 bps 136 bps
Source: Company, KRChoksey Research
KRChoksey Research
ANALYST is also available on Bloomberg KRCS
Phone: +91-22-6696 5555, Fax: +91-22-6691 9576
Parvati Rai, head-research@krchoksey.com, +91-22-6696 5413 www.krchoksey.com
Thomson Reuters, Factset and Capital IQHUL Performance Overview …(3/6)
Revenue grew moderately due to impact on discretionary Increase in raw material prices impact margin
segment
3,000 27%
2,647 2,644
11,000 8%
26.2% 2,443 2,445 26%
6.6% 6.7% 10,560 6% 2,500
10,500 4.4% 4% 2,065
10,114 24.9% 25.0% 25%
2.6% 2,000 24.8%
9,852 9,808 2%
10,000
0% 24%
1,500
9,500 -2% 23%
22.9%
9,011 -4%
1,000
9,000 22%
-6%
-8% 500
8,500 21%
-9.4% -10%
8,000 -12% - 20%
Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21
Revenue (INR Cr) % yoy growth EBITDA (INR Cr.) EBITDA margin (%)
Food & Refreshment business performed the best Decline in overall volume growth due to lockdown impact
5% 5% 5%
1% 1% 1% 1% 2%
19% 19% 19% 20%
28%
45% 46% 45% 42% Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21
38%
34% 34% 35% 37% 32%
-7%
Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 -8%
Home Care Beauty & Personal Care Foods & Refreshment Others
Source: Company, KRChoksey Research
KRChoksey Research
ANALYST is also available on Bloomberg KRCS
Phone: +91-22-6696 5555, Fax: +91-22-6691 9576
Parvati Rai, head-research@krchoksey.com, +91-22-6696 5413 www.krchoksey.com
Thomson Reuters, Factset and Capital IQITC Performance Overview …(4/6)
Revenue decline witnessed due to COVID-19 impact Margin growth supported by Cigarette, FMCG and Paper
14,000 10%
segment
5,000 4,613 45.00%
6% 4,566 4,562
5% 5%
12,000
5%
11,871 12,013 4,500 4,164
10,000
11,503 11,420 40.00%
4,000
39.7%
0%
9,502 38.4% 38.4% 35.00%
8,000
3,500 36.5%
-5%
6,000 -6% 3,000 2,647 30.00%
-10%
2,500
4,000
27.9% 25.00%
-15%
2,000
20.00%
2,000
-17% 1,500
- -20%
1,000 15.00%
Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21
Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21
Revenue (Inr Cr.) Growth (%) YoY
EBITDA (INR Cr.) EBITDA margin (%)
Segment Revenue Mix (%) FMCG and Agri business reported positive growth
40%
FMCG and Agri business gained share
20% 10%
3% 3% 4% 4% 0%
9% 4%
11% 12% 12% 12% 0%
Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY20
26% 20% 16% 16% 31% -20%
-29%
-40% -33%
25% 26% 26%
22% 28% -60%
-80%
39% 40% 41% 42% -100%
32% -94%
-120%
Cigarettes FMCG Agri Business
Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21
Paper segment Hotels
Cigarettes FMCG Agri Business Paper segment Hotels
Source: Company, KRChoksey Research
KRChoksey Research
ANALYST is also available on Bloomberg KRCS
Phone: +91-22-6696 5555, Fax: +91-22-6691 9576
Parvati Rai, head-research@krchoksey.com, +91-22-6696 5413 www.krchoksey.com
Thomson Reuters, Factset and Capital IQBritannia Performance Overview …(5/6)
Strong growth in revenue due to surge in home Cost efficiencies led to steady margin despite overall
consumption inflation in raw material prices
4,000 800 25.0%
3,421
30.0%
717
25.0%
3,049 20.0%
2,983 26.7% 492 502 21%
3,000 2,868 20.0%
454
2,700
395
16.8% 15.0%
15.0%
16.1% 15.8%
14.6%
2,000 10.0%
6.2% 6.2% 10.0%
5.0%
4.9% 5.0%
1,000 2.5% 0.0%
Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21
Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21
(200) 0.0%
Revenue (INR Cr.) Revenue growth EBITDA (INR Cr.) EBITDA margin (%)
Direct Distributers (In lakhs) No of Rural Preferred Dealers (In ‘000)
21.7 21.5 22
21 21
19.7 19
18.4 18
15.5
14
12.6
10
8
Mar/16 Mar/17 Mar/18 Mar/19 Dec/19 Mar/20 Jun/20 Mar/16 Mar/17 Mar/18 Mar/19 Dec/19 Mar/20 Jun/20
Source: Company, KRChoksey Research
KRChoksey Research
ANALYST is also available on Bloomberg KRCS
Phone: +91-22-6696 5555, Fax: +91-22-6691 9576
Parvati Rai, head-research@krchoksey.com, +91-22-6696 5413 www.krchoksey.com
Thomson Reuters, Factset and Capital IQNestle Performance Overview …(6/6)
Flat revenue growth due to supply disruption faced Cost efficiencies led to steady margin despite overall
during lockdown inflation in raw material prices
34,000
33,253 12%
11%
33,000
32,158
9,000
7,933 25%
11.2% 10%
7,127 7,514 7,476
32,000 31,493 10.8% 9%
8,000
6,941 25%
7,000
31,000
9.4% 30,505 8% 24.5% 24%
30,009 8.7% 6,000
7% 24%
30,000
5,000
23.7% 23.9%
6%
23%
29,000
5%
4,000 23.4%
3,000
23%
28,000 4%
3%
2,000
22%
22.0%
27,000
2%
1,000 22%
21%
26,000
0
1%
25,000
1.7% 0%
Q2CY19 Q3CY19 Q4CY19 Q1CY20 Q2CY20
Q2CY19 Q3CY19 Q4CY19 Q1CY20 Q2CY20
EBITDA (INR mn) EBITDA Margin (%)
Revenue from operations (INR mn) % yoy growth
Profitability increased due to lower taxes
Steady margin maintained
7,200 22%
7,020
7,000 20%
7,000
6,734 5,954
6,800
21.5% 21%
6,000
5,254 19%
21.1% 6,551 4,866
6,600
20.9% 18.5% 4,726
20.6% 5,000
4,378 18%
6,400
6,185 20% 4,000
6,200
6,005
17%
3,000
6,000
5,800
19%
2,000
15.8% 16.0% 16%
19.1%
5,600
1,000
15.0% 15%
5,400 18%
14.6%
0 14%
Q2CY19 Q3CY19 Q4CY19 Q1CY20 Q2CY20
Q2CY19 Q3CY19 Q4CY19 Q1CY20 Q2CY20
EBIT (INR mn) EBIT Margin (%)
Source: Company, KRChoksey Research
PAT (INR mn) PAT Margin (%)
KRChoksey Research
ANALYST is also available on Bloomberg KRCS
Phone: +91-22-6696 5555, Fax: +91-22-6691 9576
Parvati Rai, head-research@krchoksey.com, +91-22-6696 5413 www.krchoksey.com
Thomson Reuters, Factset and Capital IQDISCLAIMER
ANALYST CERTIFICATION:
I, Parvati Rai (MBA-Finance, M.com), Head Research, author and the name subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect my views about the subject issuer(s) or securities. I also certify that no part of our
compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.
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We submit that no material disciplinary action has been taken on KRCSSPL and its associates (Group Companies) by any Regulatory Authority impacting Equity Research Analysis activities.
KRCSSPL prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analyst covers.
The information and opinions in this report have been prepared by KRCSSPL and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way,
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Registered Office:
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Phone: +91-22-6633 5000; Fax: +91-22-6633 8060.
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Parvati Rai, head-research@krchoksey.com, +91-22-6696 5413 is also available on Bloomberg KRCS www.krchoksey.com
Thomson Reuters, Factset and Capital IQYou can also read
