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Shares of FMCG player Britannia Industries tumbled 4% to an intraday low of Rs 5,220 on the BSE; Should you invest?
Britannia Share Price
Britannia Share Price: Shares of FMCG player Britannia Industries tumbled 4 per cent to an intraday low of Rs 5,220 on the BSE after the firm reported a 10 per cent year-on-year (YoY) decline in its consolidated net profit at Rs 531 crore in the quarter ended September 2024. This was reported at Rs 588 crore in the year-ago quarter.
The quarter’s profit missed estimates, as analysts, on average, had predicted Rs 622 crore for the three-month period. The quarter was hurt by weaker demand for consumer goods, particularly in urban areas amid high inflation.
Revenue from operations was Rs 4,667.6 crore in the reported quarter, up 5 percent from Rs 4,432.88 crore in the same period of the previous financial year.
Urban consumers in the world’s most populous country have been cutting back on spending due to rising prices of essentials, including food, squeezing the bottom lines of major packaged goods makers.
Ahead of the announcement of the result, the company’s stock closed 5.62 percent down at Rs 5,425.3 on the NSE.
The company’s earnings are in line with the downbeat results posted by its peers, such as Dove soap maker Hindustan Unilever, Maggi-parent Nestle India, and tobacco major ITC, which were hurt by factors including weak urban demand.
The company’s total expenses rose by 8% during the quarter, hurt by higher prices of ingredients such as wheat and cocoa.
“A ~8 per cent volume growth with a sequential increase in revenue and operating profits are satisfactory results in the face of severe commodity inflation leading to a tepid consumer demand scenario in most FMCG categories. In the context of steep rise in prices of key commodities such as Wheat, Palm, Cocoa etc, we demonstrated agility in initiating focused pricing actions and identifying new levers for cost optimization across the value-chain. As a result, we maintained a healthy operating margin of ~15.5 per cent during the quarter. We are committed to investing in capability enhancement and brand development with the clear objective of driving market share and sustaining profits,” Varun Berry, vice chairman & managing director, said.
Meanwhile, the company announced that Jehangir Nusli Wadia has been appointed to the board as an additional non-executive non-independent director with effect from November 11, the filing said.
What Should Investors Do?
Investec maintained its ‘Hold’ rating on Britannia Industries, setting a target price of Rs 5,770.
The brokerage noted that margin challenges persist for the company. Britannia’s consolidated revenue growth of 5 per cent was in line with expectations. However, Investec anticipates further margin contraction ahead and suggests that an earnings cut is likely.
Goldman Sachs maintained a ‘Neutral’ rating on Britannia Industries, with a target price of Rs 5,350.
The brokerage highlighted that Q2 results were significantly below estimates. While volume growth was in the high-single-digit range, revenue growth lagged behind. Additionally, EBITDA margins declined sharply, and Goldman Sachs noted that input cost pressures are expected to rise in the second half of FY25.
Disclaimer:Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.
