Britannia Q3 Results: Net Profit Rises 22%, Beats Estimates

Britannia Industries Ltd.'s third-quarter profit rose beating estimates, aided by cost cuts.

Net profit of the maker of Good Day and Tiger biscuits rose 22% year-on-year to Rs 452.6 crore in the quarter ended December, according to an exchange filing. That compares with the Rs 424.3-crore consensus estimate of analysts tracked by Bloomberg.

• Revenue rose 6% over the year earlier to Rs 3,165.6 crore, against the projected Rs 3,240.4 crore.

• Operating profit jumped 22% to Rs 611.5 crore.

• Operating margin expanded to 19.3% from 16.8%. Analysts had pegged the metric at 18.2%.

Britannias margin expanded because of moderate inflation in input costs, supply-chain efficiency and rationalisation of advertising and other discretionary spends, Phillip Capital said in its post-earnings note. The brokerage said “solid performance of its subsidiaries as margin expanded to 22% from 12% (given strong growth in cheese/bread segments)” also aided operating margin.

While prices of other raw materials rose moderately, palm oil costs jumped significantly, Varun Berry, managing director of Britannia Industries, was quoted as saying in an exchange filing. “We neutralised the inflation by accelerating our cost efficiencies and sustained the new efficiencies that we witnessed during the Covid-19 induced lockdown.”

The company's expense-to-revenue ratio fell to 83.2% in the quarter ended December, down from 85.5% a year earlier.

“General trade, which is the largest channel for us, continues to grow at a healthy pace on the back of buoyancy in rural economy and recovery in urban markets,” Berry said. Other channels such as modern trade, institutional business, etc. continue to face challenges with lower footfalls in stores and offices, schools, and railway services coming back to normalcy gradually, he said.

Demand for essentials which were at elevated levels at the beginning of the year due to stocking has started to normalise with diversification of the consumer purchase basket, the company said.

Among fast-moving consumer goods makers, Hindustan Unilever Ltd., the country's largest, reported a 4% volume growth in the reported quarter. Its net profit and revenue also rose. Marico Ltd., too, posted 15% volume growth in its India business during the October-December period.

Shares of Britannia closed 1.1% lower before the results were announced, compared with a 0.2% gain in the benchmark Nifty 50.