Britannia Industries slips 3% as Q1FY24 results misses Street estimates

Shares of Britannia Industries slipped 3.5 per cent to Rs 4,630 per share in Monday's intra-day trade, after the company's June quarter results (Q1FY24) came below Street estimates. 
 

The biscuit maker's revenue and profit-after-tax (PAT) 8.4/35.6 per cent year-on-year growth in Q1FY24 were below consensus estimates by 2.4/10 per cent, respectively. The company's volume growth, too, was flat as compared to estimates of 4-5 per cent. 
 

So far this calendar year, the stock surged 11 per cent, as against an 8 per cent rise in the S&P BSE Sensex.
 

Analysts at Nuvama Institutional Equities said that the company missed expectations on the profit front due to price correction undertaken during Q1 to tackle renewed local competition.
 

"With softening of commodity prices, local competition intensified and to cope up with this, Britannia undertook price corrections to remain competitive and tackle this renewed competition," the brokerage firm said.
 

The company's earnings before interest, tax, depreciation, and amortisation (Ebitda), meanwhile, grew 37.6 per cent YoY to Rs 689 crore in Q1FY24, while Ebitda margins expanded 370 basis points (bps) YoY to 17.2 per cent.
 

Other expenses, meanwhile, grew 12.2 per cent during the quarter, a moderation in pace compared to FY23, but higher than levels that Britannia used to grow overheads in the past.
 

Staff costs, too, rose 28 per cent YoY due to stock-based payments, given a sharp up move in the share price during the quarter. 
 

Analysts at JM Financial, on the other hand, expect the second half of FY24 to be challenging from the topline as well as bottomline front, given lower volumes and higher margin.
 

"A more aggressive cost-efficiencies program may be needed to boost profitability. The stock could consolidate after the recent sharp run up, especially since 2H outlook is not looking all that easy at this point of time," the brokerage firm added.