Shares of Britannia Industries rose three per cent during Wednesday's trading session even after the company reported muted growth in the October-December quarter of fiscal 2023-24 (Q3FY24). Britannia share price opened at ₹5115.10 apiece on the BSE and touched an intra day high of ₹5180.00 and an intraday low of ₹4930.85. Shares settled 1.42 per cent higher at ₹5,077.05 apiece on the BSE.
Britannia Industries which owns popular brands such as Good Day, Tiger, NutriChoice, Milk Bikis, and Marie Gold, reported a 40.4 per cent decline in consolidated net profit at ₹555.66 crore for the December quarter. The company had posted a net profit of ₹932.40 crore in the year-ago period, Britannia Industries said in a BSE filing.
"In a progressively recovering demand environment with heightened competition, our performance this quarter reflects our resilience and competitiveness. Over the last 24 months, we achieved a robust 19 percent growth in revenue, coupled with a commendable 52 percent increase in operating profit," said Varun Berry, vice-chairman & MD, Britannia.
The subdued growth observed in the third quarter of current fiscal can be attributed to several factors, including a challenging comparison base, price reductions, intensified competition, and modest single-digit volume expansion.
Despite these challenges, revenue from operations saw a slight increase to ₹4,256 crore from ₹4,196 crore in the corresponding quarter of the previous fiscal year. Analysts' projections had anticipated a year-on-year revenue growth of 3 percent, reaching ₹4,303 crore for the quarter.
Britannia’s consolidated sales for the December quarter stands at ₹4,192 crore, growing 2 per cent over last year and operating profit stands at ₹743 crore. For the nine months ended 31st December 2023, consolidated revenue stands at ₹12,532 crore, growing 3.6 percent over previous year and operating profit stands at ₹2,162 crore, growing 15.6 percent over previous year.
Domestic brokerage firm JM Financials has given a ‘buy’ rating on the stock. The brokerage has given a target price of ₹5,190 on the stock and sees a potential upside of 7.4 per cent. Britannia’s Dec-Q earnings were broadly inline with our estimates with a tad better-than-expected topline, though still soft. Volumes grew five per cent with pricing down 2-2.5 per cent YoY during the quarter after the steep pricing growth seen from end-FY22 to early-FY24.
‘Management commented that demand scenario is progressively recovering, but rural demand was generally subdued and challenges relating to heightened competition remained. Gross margin continued to expand well and surprised positively again (50bps beat vs our forecast) - up yoy and also qoq despite the price-cuts undertaken during the quarter - a rather benign input-costs environment helped in this regard, according to the brokerage.
‘’Staff costs were significantly above recent run-rate but the impact from the same was partly offset by very well-controlled ‘Other Expenses’ which rose just 1.4 per cent - likely helped by some rationalisation in ad-spends as well. We expect Britannia’s topline and profit growth to remain soft over the near-term,'' said JM Financials.
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