Shares of Britannia Industries are hovering near their record highs 4,386 a piece which recently hit the BSE. The company has entered into a joint venture with Bell SA of France and Britannia Dairy Pvt Ltd (BDPL) for the development, manufacturing, marketing, distribution, trading and sales of cheese products in India and certain other countries.
“There is growing appetite in Britannia for its cheese business. The company has formed a joint venture with French cheese major Bel SA (Bel), a large global player with presence in more than 120 countries. Bell is already present in India through its marquee brand ‘The Laughing Cow’ (small in size; we assume INR150-200mn). Importantly, the joint venture provides Britannia with access to technological know-how, innovation and expertise, Edelweiss said in a note.
The brokerage house believes that the joint venture is in line with Britannia’s growth plans. While the company dominates biscuits, its presence in cheese has been sub-scale (through outsourcing). The deal with a 20-year lock-in allows Britannia to replicate its biscuit template to dominate mid and premium cheese in India and a few more markets, it added while retaining its ‘buy’ rating. fmcg stock with a target value of 5,090 each.
“We expect BRIT to dominate the mid and premium cheese market in India by copying its biscuit template. We remain positive as BRIT’s new CEO Ranjit Kohli continues to drive product innovation, distribution expansion and digital focus,” said Edelweiss.
Britannia delivered healthy volume growth of 4% YoY and widened the market share gap with its top two competitors (reaching a 15-year high), aided by an increase in its distribution reach. “Offensive campaigns for the first launches done on Milk Bikis Atta, Croissant Campaign, Biscafe, Bourbon, 5050 Potazos, 5050 Golmaal are doing very well in the past,” said brokerage BNP Paribas. 4,550.
The FMCG major expects commodity prices to remain largely stable in 2HFY23 with slightly better net raw material inflation and expects gradual margin expansion, supporting growth in adjacent categories.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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