Britannia Industries Shares Hit Record High As Q2 Beat Estimates
Shares of Britannia Industries Ltd. hit a record high on Monday after its second-quarter profits beat estimates, aided by a price hike in its products.
Net profit of the maker of Good Day and Tiger biscuits rose 28% over the previous year to Rs 493.3 crore in the quarter ended September, according to its exchange filing. That compares with the Rs 425.5-crore consensus estimate of analysts tracked by Bloomberg.
Britannia Industries Q2 Highlights (YoY)
Revenue rose 21% to Rs 4,379.6 crore, against an estimate of Rs 4,083.3 crore, in what is the company's highest quarterly revenue.
Operating profit rose 27% to Rs 711.7 crore against analysts' estimates of Rs 605.6 crore.
Operating margin expanded to 16.3% from 15.5%, beating the consensus forecast of 14.8%.
The cost of raw materials consumed rose 17.3%
Britannia Industries has seen one of the most resilient (core) performance in the last three years (backed by share gains), according to ICICI Securities. Consensus expects Britannia to invest in new categories as till now pressure on core margins was not providing ammunition, it said.
"Our go-to-market strategy and increase in distribution reach have converged to deliver robust top-line growth, aided by a mid-single digit volume growth," said Varun Berry, the company's managing director.
Shares of the company rose 9.36% to Rs 4,160.15 apiece as of 10:35 a.m., while the benchmark Nifty 50 gained 0.16% on the NSE. The stock had hit record high of Rs 4,184.60 during the early trade on Monday.
Total traded volume is 24.4 times the 30-day average. Relative strength index is at 74, suggesting that the stock may be 'overbought'.
Of the 40 analysts tracking the company, 23 maintain a 'buy', 14 suggest a 'hold' and three recommend a 'sell'. The 12-month consensus price target implies a downside of 1.7%
Here's what analysts made of Britannia Industries' quarterly results:
Morgan Stanley
Keeps 'overweight' rating with target price of Rs 3,892, implying a potential upside of 2%.
The company saw positive growth momentum in the last few months
Says the company expanded both direct and rural distribution.
The new innovations did well and are seeing strong growth.
Axis Capital
Upgraded to 'Add' with target price of Rs 3,900, implying a potential upside of 13%.
Strong operational beat led by consolidated revenue growth of 22% YoY and Ebita by 27% YoY.
Management has highlighted higher investments in digital and mass media space to support robust NPD pipelines.
Sees Increase in distribution reach (including rural expansion) and aggressive market share gains.
ICICI Securities
Upgraded to 'Add' with target price of Rs 4,300.
Continues to drive market shares gains (15-year-high) in weak markets and distribution expansion (rural markets).
The company has taken sufficient pricing actions to guard against near-term pressures.
Continues to undertake intensified cost efficiency measured to protect margins.
Consolidated sales were up by 21% YoY with a 3-year CAGR of 13%.
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