Britannia: Buy-out boost

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The stock rose by 8.7 per cent last week to close at Rs 1,712 on the news of a buy-out. Kraft has bought the global biscuit business of Danone for $7.2 billion in cash.

The business operates in 20 countries, except India and Latin America. In India, Danone has a presence in the biscuits market through Britannia, where it has a share of 25.5 per cent.

The Wadia family and Danone are currently involved in a dispute pertaining to Danone's interests in India other than Britannia. Now that Danone has exited the biscuits business globally, analysts believe its exit from India is imminent. While it is difficult to predict the final outcome, minority shareholders are most likely to benefit irrespective of the outcome.

According to Citigroup Research, one should stay invested in Britannia. There is value in the stock on account of the turnaround in the company's margins going forward.

There could also be an upside in case of a potential stake sale.