Year 2022 an icing on the cake for this FMCG stock; do you own it?

The year 2022 has turned out to be a historic one for index stock Britannia Industries not in one, but many ways.

Companies in the fast moving consumer goods sector have had a tough year grappling with skyrocketing commodity prices, sluggish rural demand, and weak profitability.

But sector majors such as Britannia have managed to maneuver these hurdles and report breadth-taking earnings performance.

A thumbs-up by Dalal Street investors for the same reflects in the stock performance and milestones it has achieved this year.

The fantastic five milestones for the company are:

– The stock has risen 22% year-to-date, giving the best yearly returns in 4 years

– The company’s market capitalisation crossed the Rs 1 lakh crore mark

– The stock gave a 5-year breakout and hit a lifetime high of Rs 4,451.65

– The stock has outperformed most frontline peers and even the benchmark Nifty 50

– Britannia’s overall market share in the industry hit a 15-year high in Q2

MORE GOODIES IN STORE?

The strong show by the stock this year is probably just a trailer, believe market experts, who see more steam in this counter.

Of the 36 analysts covering the company, for 13 of them the stock is a “strong buy”, according to Trendlyne.

Britannia’s strong sales strategy to drive distribution reach and cost optimization measures to aid profitability has worked in its favour and has impressed analysts.

Its recent deal to form a joint venture with French major Bel Group to boost its cheese business is an icing on the cake.

According to Nomura Financial Advisory and Securities, this tie-up opens up export avenues for Britannia, and given that Bel Group is a major player in the healthy dairy, fruit and plant-based snacks, it will give the former access to new categories from its global portfolio.

Nomura raised Britannia’s price-to-earnings multiple to 51 times its 1-year forward earnings from 48 times earlier on improving growth outlook and better margin profile.

Nomura’s target price of Rs 5,200 for the stock implies an over 18% upside from current levels. The stock on Thursday ended flat at Rs 4,394.90 on the National Stock Exchange.

For Jefferies India too, the stock is among the top picks in the consumer staples pack given the better demand outlook on the back of a likely revival in rural consumption.

(With data inputs from Ritesh Presswala)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)