- Biscuit producer Britannia Industries Ltd jumped 33 percent to hit some 403 crores as the manufacturer of Good Day cookies and NutriChoice cookies.
- The company reported a 7 percent rise in total revenue at around 3,117 crores for the quarter ended September 30. Relative to some 30303 crores the business clocked in the year-ago period, consolidated net profit for the quarter increased at some 403 crores.
The second-quarter profit of Biscuit producer Britannia Industries Ltd jumped 33 percent to hit some 403 crores as the manufacturer of Good Day cookies and NutriChoice cookies rode on cost efficiencies in the midst of rising raw material costs.
The company reported a 7 percent rise in total revenue at around 3,117 crores for the quarter ended September 30. Relative to some 30303 crores the business clocked in the year-ago period, consolidated net profit for the quarter increased at some 403 crores.
“We continued to invest in enhancing our brand equity through oriented consumer promotions during this sluggish demand process. This is based on the belief that the recent steps announced by the government would kick-start the economy and improve consumer demand as we move forward, “Varun Berry, managing director, Britannia Industries Ltd, said on Monday in a submission to the stock exchanges.” On the cost front, we witnessed moderate inflation in the prices of key raw materials for the bakery sector as there was extreme inflation in the bakery industry.
We, however, accelerated the drive on cost efficiencies and leveraged fixed costs which helped us improve the shape of our business and deliver the highest ever operating profits in the quarter,” Berry added.
The company continued to premiumise its biscuits portfolio during the quarter and launched new flavors for some of its existing brands. The company witnessed a pickup in its new category of other bakery products as well. “We have also seen sequential growths in some of the new category launches and our plan is to scale up salted snacks in West and croissant in East and South,” Berry added.
Britannia Industries Ltd’s shares on Monday settled on the BSE at approximately 3,116.25 percent, down 1.43 percent from the previous close.
The margin of earnings before interest, tax, depreciation, and amortization (Ebitda) rose by 31 basis points to 16.1%. Even as the costs of salaries rose at a comparatively faster rate, the decrease in other expenditures as a percentage of revenue improved Ebitda’s efficiency. A one-hundredth of a percentage point is a reference point.
The shares are currently trading at estimated earnings of approximately 49 times for the financial year 2021. It’s not especially cheap. Therefore, the road ahead may not be smooth.
Rural slowdown narrative along with improved growth by regional players, which resulted in a subdued 3 percent volume growth in the September quarter, points to an end to easy market share gains— in northern and eastern India— and thus a muted medium-term, ICICI Securities Ltd analysts pointed out in a 12 November survey. “We conclude that recent launches in premium biscuits and adjacent products ‘ geographical expansion can somewhat alleviate this risk,” the broker said.