Britannia has currently become the best stock in the entire FMCG lot. With most others putting up a lackluster performance, Britannia has managed to consistently deliver very good numbers. In Q2FY14 too, it did not disappoint. It posted a 66% (YoY) jump in consolidated net profit at Rs.98 crore on a 13% rise in net sales at Rs.1740 crore. OPM was up by a whopping 435 bps at 8.6% and this good numbers were possible due to better products mix, higher price realizations and efficient cost management. The company managed to cap the rise in operating expenses to 8%(YoY) which is what helped boost the overall margins. Moderation in commodity prices also helped keep a cap on the costs. Following these numbers, many brokerage houses have started recommending this stock in the FMCG space along with ITC.

The company is putting up a new biscuit making plant at Gujarat and this is expected to go on stream in current Q3. There were also plans to set up a new plant at Karnataka but no word yet on the same. The company is adding capacity to keep pace with its 20% revenue growth and to keep off growing competition from ITC and Parke through increased volumes. The company has land in Chennai – a closed factory once it turned inefficient and an office in Bangalore. The sale of these properties could add value. There are also rumours of the company planning to sell off its Daily Bread unit as the company now wants to concentrate on its core business of FMCG. A lot seems be baking in this company and best to keep a close watch.