Britannia Industries share price hits 52-week high, up 48% in last one year; is it still a buy? | Mint
Active Stocks
Thu Feb 22 2024 10:36:44
  1. Tata Steel share price
  2. 145.00 0.80%
  1. State Bank Of India share price
  2. 763.50 -1.04%
  1. Power Grid Corporation Of India share price
  2. 276.00 -1.48%
  1. NTPC share price
  2. 332.25 -1.15%
  1. Tata Motors share price
  2. 921.30 0.03%
Business News/ Markets / Stock Markets/  Britannia Industries share price hits 52-week high, up 48% in last one year; is it still a buy?
BackBack

Britannia Industries share price hits 52-week high, up 48% in last one year; is it still a buy?

Britannia Industries shares are up 47% in the past year. Brokerage firm Emkay Global Financial Services recently initiated coverage on the stock with a buy call, pegging the target price at ₹5,700. Technical analysts are also optimistic about the stock.

Britannia is well-placed in the core biscuits segment. (Agencies)Premium
Britannia is well-placed in the core biscuits segment. (Agencies)

Britannia Industries share price rose 1.7 per cent in intraday trade on BSE on Friday (June 16) to hit its fresh 52-week high of 5,057.65. The stock ended 1.23 per cent higher at 5,035, extending the gains into the second consecutive session.

The stock has been witnessing strong traction in the last one year, outperforming the BSE FMCG index and the equity benchmark Sensex. Britannia shares have risen 48 per cent in the last one year against a 39 per cent gain in the BSE FMCG index and a 23 per cent gain in the equity benchmark Sensex.

On a monthly basis, Britannia has been in the green since April. It is up nearly 8 per cent in June so far. The stock hit its 52-week low of 3,272 nearly a year ago on June 20, 2022, on BSE.

The stock looks poised for growth in the long term.

Recently, brokerage firm Emkay Global Financial Services initiated coverage on Britannia stock with a 'buy' call, pegging the target price of 5,700, based on 50 times PER (price-to-earnings ratio) which is nearly 20 per cent premium to its last 10-year average forward PER.

Emaky said the valuation premium is justified by the improved execution and positive outlook on adjacencies.

The brokerage firm believes Britannia is well-placed in the core biscuits segment and is promptly addressing adjacency gaps, to evolve into a ‘total foods company’.

"Britannia aspires to clock mid-teen growth, with double-digit growth in biscuits which, we believe, is possible only post requisite action towards establishing its adjacencies. But given the relentless rural slowdown, we model a low 10 per cent revenue CAGR over FY23-26E," said Emkay.

Emkay pointed out that with a solid brand price straddle in place, it has been widening product availability with improved distribution, and has bolstered sourcing with an amplified capex cycle. The brokerage firm underscored the shift from opex to capex aiding earnings.

"Management targets achieving mid-teen growth which, in our view, will require an improved demand setting across urban and rural. We model in nearly 10 per cent top line and nearly 16 per cent earnings CAGR over FY23-26E. Key risks to our buy call are (a) sustained inflation in key wheat flour, (b) a surge in competitive intensity (spike at the premium-end), (c) the company’s inability to execute in adjacencies, and (d) rural slowdown," said Emkay.

Technical analysts also appear positive about the stock.

Gaurav Bissa, VP of InCred Equities pointed out that Britannia has been in a strong uptrend since 2022 with the formations of higher highs and higher lows. It has witnessed strong outperformance for the last few months.

"The stock is giving a fresh breakout from ascending wedge pattern on the weekly charts once it confirms a close above 5,000 levels. The RSI is trading above 80 on the daily time frame," said Bissa.

"Since 2017, the stock has witnessed a small profit booking whenever RSI has touched 82-83 levels. So, some consolidation might be seen in Britannia. However, that is expected to be short-lived once the stock confirms a breakout on a weekly basis which can push the stock towards 5,250 level in the coming days," Bissa said.

 

Read all market-related news here

Pravesh Gour, Senior Technical Analyst at Swastika Investmart, who finds this stock attractive for the long term, said the counter has a strong bullish setup as it is forming a rising channel formation on the daily timeframe. This pattern is characterized by a series of higher highs and higher lows, indicating increasing buying pressure.

"It has retested its previous breakout level of 4,150 after hitting a fresh 52-week high. On the longer timeframe, it has witnessed an upward channel pattern breakout above 4,800. The high volume during the breakout further reinforces the significance of this move," said Gour.

"The overall structure of the counter is very lucrative, as it is trading above all its important moving averages. The momentum indicator RSI (relative strength index) is also positively poised, whereas MACD (moving average convergence divergence) is supporting the current strength. On the upside, 5,400 is a susceptible area; above this, we can expect a run-up towards 5,800 levels in the near term. On the downside, 4,450 is major support for any correction," Gour said.

Disclaimer: The views and recommendations given in this article are those of individual analysts and brokerage firms. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Check all the latest action on Budget 2024 here. Download The Mint News App to get Daily Market Updates.
More Less
Published: 16 Jun 2023, 12:15 PM IST
Next Story footLogo
Recommended For You
GENIE RECOMMENDS

Get the best recommendations on Stocks, Mutual Funds and more based on your Risk profile!

Let’s get started
Switch to the Mint app for fast and personalized news - Get App