Shares of FMCG giant Britannia Industries soared on Wednesday after the firm reported strong Q2 results. We take a look at what brokerages have to say.
Shares of FMCG giant Britannia Industries soared on Wednesday after the firm reported strong Q2 results. Britannia Industries has reported a 33% jump in consolidated net profit to Rs 402.73 crore for the second quarter. The company had posted a net profit of Rs 303.03 crore in the year-ago period. Britannia Industries share price closed 5% higher at Rs 3,270.25 on BSE. Meanwhile, Macquarie noted that the volume growth of the company remained weak at 3 percent and on the balance sheet side, inventory days have gone up significantly. The global brokerage firm has retained an ‘underperform’ rating on the stock. Britannia Industries reported consolidated revenue growth of 6% for the quarter ending September at Rs 3,023 crore. Britannia also reported sequential revenue growth of 13%.
Brokerage firm Citi has raised its target to Rs 3,575 per share from Rs 3,000 earlier. The brokerage revised its earnings per share (EPS) estimates by 9-10 percent over FY20-22, on the back of the recently introduced corporate tax rate cut. Consistent strategies and good execution should continue to drive healthy growth, the firm noted.
“We continued to grow faster than the market with a sequential revenue growth of 13 percent. In the base business, we continued our premiumisation and innovation journey … during this phase of sluggish demand, we continued to invest in enhancing our brand equity through focused product campaigns,” Britannia Industries MD Varun Berry said. While FMCG companies have been facing the headwinds of ongoing slowdown, one of the leading biscuit makers Britannia said that the company launched several premium products at a time when people were not willing to buy five-rupee biscuits.
Earlier, Financial Express Online had reported that fast-moving consumer goods companies tend to launch comparatively costlier products during slowdown as the affluent still have money to experiment. Britannia has said that the company will ramp up the production of other categories in the coming months. “Our plan is to scale up “Salted snacks” in West & “Croissant” in East & South,” Varun Berry added.