Last time it was Amul Ice Cream with Hindustan Unilever. The product changes but the situation remain the same.
This should be watched very closely.
- Britannia Industries is one of the leading food companies in India. Its primary products include biscuits, bread, cakes, rusks, milk, butter, cheese, and ghee, which are distributed through 45 lakh retail outlets.
- The Company’s portfolio consists of well-known brands: Tiger (mass biscuits), Treat (cream biscuits), 50-50 (crackers), Good Day (premium cookies and its highest-selling brand), Marie, Milk Bikis, and NutriChoice (premium high-fiber biscuits).
For Britannia Industries the product-wise breakup constitutes 75% to Biscuits. And in that Premium segment is again 75%.
With this new launch and huge network that Amul has can it take on the Britannia industries should be a very close watch.
Things that need to be closely monitored currently the Ad spend 4% of the revenue. The question is would they have to increase this spend to maintain the revenue. Indirectly this could be a direct hit to the profitability.
The valuation of Britannia Industries Limited are high and are expected to remain high. Nevertheless, even a little impact on the performance could bring about the selling pressure.
Keeping in mind the current situation of the economy and high valuations of FMCG sector I would not go for any long term investment in the company.
Your views are invited.