Britannia Industries share price slumps to 52-week low after firm’s Q1 results; should you buy stock?

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Published: August 13, 2019 12:58:21 PM

Shares of India's major biscuit manufacturer Britannia Industries slumped to 52-week low after the firm reported weak Q1 results in the Apr-Jun period.

According to the company, Britannia Industries has seen strong results in Berry's tenure and is trying to be a "global total foods company". (Website image)Britannia Industries share price lost more than 3.7% to hit the day’s low at Rs 2,490.60 on BSE. (Website image)

Shares of India’s major biscuit manufacturer Britannia Industries slumped to 52-week low after the firm reported weak Q1 results in the Apr-Jun period. Britannia Industries share price lost more than 3.7% to hit the day’s low at Rs 2,490.60 on BSE. This level also represents a fresh 52-week low for the stock. In the latest quarter, Britannia Industries has reported a 3.5% on-year drop in net profit to Rs 249 crore as against Rs 258.1 crore in the same quarter previous fiscal. The firm’s revenue increased 6.2% on-year to Rs 2,700.4 crore. In the comparable period previous year, Britannia had reported a revenue of Rs 2,543.8 crore.

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Britannia’s Earnings before interest, tax, depreciation and amortization (EBITDA) increased 1.4% to Rs 394.9 crore as against Rs 389.4 crore in the year-ago period, while EBITDA margin reduced to 14.6% as against 15.3% in Q1FY19. Taking stock of the reported results, brokerage firm Motilal Oswal said that while Britannia has been continually reporting impressive market share growth, the slowdown in the Biscuits category (which contributes over 80% to sales for Britannia) in 1QFY20, has impacted its growth and the recovery appears unlikely anytime soon. “This factor has resulted in a higher cut to our EPS forecasts (~10% each in FY20/FY21), than warranted by the 1QFY20 results (PAT miss of 8%),” Motilal Oswal said in a report. The research firm has a buy rating with target stock price of Rs 3,030. 

Brokerage firm Prabhudas Lilladher noted that Britannia has managed a 130 bps gain in market share despite the currently muted environment. Further, the firm has also seen high traction in new launches of Cream wafers and Milkshakes. The firm’s focus is on scaling up the new launches and achieve the targeted 9% contribution from innovations in FY20 (4.5% in FY19). The firm has a ‘accumulate’ rating on the stock with a target price of Rs 3,068. 

(Please consult your financial advisor before taking any investment-related decision)

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