Britannia soars 5% to hit record high on strong Q3 operational performance

Shares of Britannia Industries soared 5 per cent to hit a record high of Rs 4,596.65 per share in Thursday’s intra-day trade, after the company reported a strong operational performance in the December quarter (Q3FY23).

The stock of packaged foods company surpassed its previous high of Rs 4,535, which it had touched on December 19, 2022. In comparison, the S&P BSE Sensex was up 0.06 per cent at 59,745 at 11:37 am.

In Q3FY23, Britannia’s consolidated sales grew 16 per cent year-on-year (YoY) to Rs 4,101 crore, while operating profit rose 55 per cent YoY to Rs 760 crore, and net profit jumped 151 per cent to Rs 932 crore over the previous year quarter.

The company witnessed positive growth momentum over the last few quarters. The growing consumer franchise and brand strength is evident in the consistent market share gains over the past 39 quarters, the management said.

The company supported brands and innovations, with requisite investments in digital and mass media space. Some of the new launches like Biscafe, Golmaal, NC Seeds & Herbs and Marble cake have done extremely well and continued to grow aggressively quarter on quarter. Pricing actions and intensified cost efficiency program, too, helped Britannia to mitigate inflation.

“Our Go-to-market strategy and investments in brands & innovation have helped the company register a robust topline growth of 16 per cent YoY. Our continued focus on enhancing direct reach coupled with Rural agenda have helped the company to deliver solid growths over the past few quarters,” the management said.

The company said that their pricing actions and intensified cost efficiency program helped mitigate the inflation. On the back of opportunistic buying and moderation in inflation this quarter, operating margins improved by 330 basis points (bps).

Analysts at Sharekhan remain bullish on Britannia, with a price target of Rs 5,060 per share.

The strong positioning in biscuit segment, additional growth levers, and strong liquidity position will make Britannia a strong play in the large FMCG space, said analysts. The company had entered into a JV agreement with Bel SA, France, to expand its cheese business (likely to grow by 5x over the next five years).

“With consistent market share gains, good traction to the new launches, deepening penetration in the rural market, and expected recovery of the rural market, the company will continue to achieve volume growth ahead of the industry’s growth in the core biscuit category. As wheat prices continue to remain high, EBIDTA margin will remain subdued in the near term. However, the company has strong drivers in place to achieve margin expansion in the long run,” the brokerage firm said.