Britannia Industries Share Price up by 4% on Q4 Market Share Growth

Tanushree Jaiswal 6th May 2024 - 04:14 pm

Despite a larger-than-anticipated decline in net profit, shares of Britannia Industries rose over 8% in early trading on May 6. By 9:20 am IST, shares of Britannia Industries were trading at ₹4,915.35 on the NSE, marking an increase of 3.6% from the previous session's closing price.

On May 3, Britannia reported a consolidated net profit of ₹536.61 crore for the March quarter, marking a decrease of 3.76% year-on-year. This was slightly below expectations, as a Moneycontrol poll involving 10 brokerages had predicted a nearly 3% decline to ₹542 crore. The company's total revenue for the quarter was ₹4,069.36 crore, a 1.14% increase from ₹4,023.18 crore in the corresponding quarter of the previous year. This revenue growth fell short of brokerage forecasts, which had anticipated a 2.4% year-on-year increase.

During the March quarter, Britannia observed a modest reduction in its earnings before interest, taxes, depreciation, and amortisation (EBITDA), which decreased by 1.7% to ₹785.5 crore from ₹800.9 crore in the same period the previous year. Additionally, there was a slight decline in margins, which fell by 50 basis points to 19.4%.

The board of Britannia Industries has proposed a final dividend of ₹73.5 per share for the fiscal year that concluded on March 31, 2024. During the quarter ending in March, Britannia witnessed a revival in its market share, attributed to strategic pricing actions aimed at maintaining competitiveness and augmented by increased investments in branding and an expansion of its distribution network.

Britannia Industries experienced double-digit growth in its e-commerce and modern trade segments. The company's designated focus states outperformed other regions in terms of growth, despite facing subdued demand in rural areas.

Nuvama Institutional Equities said, "Rural demand which has been a laggard for FMCG industry is expected to revive in FY25 on the onset of likely strong monsoon. We expect Britannia to be a beneficiary of this revival. Further, a good wheat crop output will aid margins."

Britannia Industries has stated its intention to maintain competitive pricing with the dual objectives of enhancing market share and sustaining profitability. Meanwhile, CLSA has continued its outperform rating on the stock, setting a target price of ₹5,636 per share, which represents a potential increase of over 18% from the closing price of the previous session.

Over the last six months, shares of the firm have appreciated by approximately 6.2%. In contrast, the Nifty 50 index has experienced gains of around 16% during the same period.

The company has stated its commitment to closely monitoring commodity prices and the changing geopolitical environment. Additionally, its cost efficiency program is consistently delivering operational savings, approximately 2% of revenue, which supports robust operating margins.

Following the announcement of the results, Britannia's Vice Chairman and Managing Director, Varun Berry, commented on the company's resilient performance amidst a challenging economic landscape. He emphasized the strategic pricing actions undertaken during the quarter to remain competitive and the efforts to broaden distribution networks, especially in rural areas.

Britannia expressed a cautiously optimistic outlook, with a vigilant approach to monitoring commodity prices and global geopolitical events. The company plans to persist in its focus on cost-efficiency measures while also investing in brand development and expanding its market share.

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Tanushree Jaiswal

Disclaimer: Investment/Trading in securities Market is subject to market risk, past performance is not a guarantee of future performance. The risk of loss in trading and investment in Securities markets including Equites and Derivatives can be substantial.

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