Britannia GRP Task

DEPARTMENT OF FINANCIAL STUDIES
TASK 3 - RATIO ANALYSIS
BY GROUP 1
Puneet Kajal
Anubhav Saxena
Shubhangi Sonal
Aniket Sahu
Saurabh Singh
Weslee Bhushan Katikala

RELATIVE VALUATION OF BRITANNIA
Good Day? Bourbon? Little Hearts? We’ve all heard about and tasted at least one of these; these
are the evergreen products of Britannia Industries Limited formerly known as Britannia
Biscuit Company Limited.
WHEN?
Established in 1892 with mere rupees 295, based out of Kolkata, today is India’s not only one of
the oldest but also the largest FMCG company (in the Top 5). After its initial foundation, the
production of biscuits from a small factory, was acquired by the Gupta Brothers. In 1918, C.H.
Holmes, an English businessman, was taken on as a partner and the Britannia Biscuit Company
Limited was launched. Lastly, the major milestone was that in 1993, when textile tycoon Nusli
Wadia of Bombay Dyeing took control of the company.
WHO?
● Nusli Neville Wadia, chairman. Also, the chairman of Wadia group is the key person
behind this conglomerate.
● Varun Berry, CEO.
WHAT?
Britannia is a Food Company whose products majorly comprises of:
Bakery Dairy
HOW?
Britannia currently has a biscuit-heavy portfolio while it's trying to make its way to become a
total food company. Around 80% of the company’s revenue is generated from its biscuits. Dairy
accounts for merely 5% of its revenue currently. In the year March 2022, the biscuit giant’s
revenue was nearly $1.7 billion and out of it only $60 million came from dairy. So, Dairy is the
segment where it is still trying to ramp up its business.
RELATIVE VALUATION
What is valuation?
Independent of a company’s sales or turnover or profits, it’s the determination of the current or
projected worth of a company and its assets.
What is relative valuation?
A method to do the valuation of a company. It is by comparing them to other businesses based

on certain metrics, for instance, ratios. It provides insights into the company's value relative to its
industry and helps investors make informed decisions.
Ratios:
● Price-to-earnings ratio: A metric measuring the price of a stock relative to its earnings per
share (EPS). A high P/E ratio could mean that a company's stock is overvalued and a
lower ratio shows undervaluation.
● Price-to-book ratio: Ratio of the market value of a company's shares (share price) over its
book value of equity. Investors use the price-to-book value to gauge whether a stock is
valued properly.
● Price-to-sales ratio: It compares a company’s stock price to its revenues. It shows how
much investors are willing to pay per dollar of sales for a stock.
● Enterprise value(EV)-to earnings before interest, taxes, depreciation, and
amortization(EBITDA) ratio: Enterprise multiple takes into account a company's debt
and cash levels in addition to its stock price and relates that value to the firm's cash
profitability.
Competitor Companies:
● Parle
● Nestle
● Dabur
● HUL
Comparison with competitor companies:
Ratio Formula Britannia Parle Nestle Dabur HUL
P/E Market Price per 63.82 96.32 79.36 60.59 60.14

Share/Earnings
per Share
P/B Market Cap/ 34.65 0.8 75.92 11.32 10.41

Book Value of
Equity
P/S Market Cap/ 8.14 154.80 12.96 8.95 11.94

Sales
EV/EBITDA Enterprise 33.45 114.44 53.1 41.36 34.05

Value/EBITDA
Price to Earnings (P/E) Ratio Comparison of Different Companies:
Price to Sales Ratio (P/S) Ratio Comparison of Different Companies
Price to Book Ratio (P/B) Ratio Comparison of Different Companies

Enterprise Value to Revenue Ratio (EV to EBITDA) of Different Companies
Undervaluation/Overvaluation?
There are different ways that can be used to determine whether a company is overvalued or
undervalued, but since we have taken into account the P/E Ratio of Britannia and its competitors
in the aforementioned table, we would use it to see whether the companies are overvalued or
undervalued.
The current normal P/E Ratio for the FMCG industry is between 45 to 55, and we would use this
range as an ideal figure. A lower P/E ratio is generally considered better because it implies that
the business is potentially undervalued and could have significant growth opportunities. If the
P/E ratio is high, the investor is going to have to pay more to invest in the business so it could
indicate that the company is overvalued.
-Britannia has a P/E ratio of 63.82 which indicates that it is Overvalued.
-Parle has a P/E ratio of 96.32 which indicates that it is much Overvalued as compared to
industry standards.
-Nestle has a P/E ratio of 79.36 which indicates that it is Quite Overvalued.
-Dabur has a P/E ratio of 60.59 which indicates that it is Slightly Overvalued.
-HUL has a P/E ratio of 60.14 which indicates that it is also Slightly Overvalued.

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DEPARTMENT OF FINANCIAL STUDIES

TASK 3 - RATIO ANALYSIS

Weslee Bhushan Katikala

Britannia is a Food Company whose products majorly comprises of:

What is relative valuation?

A method to do the valuation of a company. It is by comparing them to other businesses based

Comparison with competitor companies:

Ratio Formula Britannia Parle Nestle Dabur HUL

P/E Market Price per 63.82 96.32 79.36 60.59 60.14

P/B Market Cap/ 34.65 0.8 75.92 11.32 10.41

P/S Market Cap/ 8.14 154.80 12.96 8.95 11.94

EV/EBITDA Enterprise 33.45 114.44 53.1 41.36 34.05

Price to Sales Ratio (P/S) Ratio Comparison of Different Companies

Price to Book Ratio (P/B) Ratio Comparison of Different Companies

-Britannia has a P/E ratio of 63.82 which indicates that it is Overvalued.

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