Britannia shares under pressure as inflation and falling volumes eat away at profitability

By IST (Released)


Britannia share price: Major FMCG’s stock pulled back after a positive start on Friday, a day after its quarterly performance fell short of analysts’ expectations.

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Britannia shares gave up initial gains in a volatile session on Friday, a day after major FMCG reported quarterly performance below Street estimates. High commodity inflation – thanks to a surge in commodity prices – and a contraction in domestic sales volumes hurt its profitability.

Britannia’s stock fell more than 2% from the day’s high, slipping as low as Rs 3,742 apiece on the BSE.

Its net profit for the April-June period fell 13.2% to Rs 336 crore from the corresponding period a year ago, according to a regulatory filing.

Britannia – which owns brands such as Good Day, NutriChoice, Marie Gold, Tiger and Tiffin Fun – managed an 8.7% year-on-year increase in revenue, due to a series of price hikes, although ‘a 2% decline in domestic sales volumes played the spoilsport.

analysts from a CNBC-TV18 poll had estimated that Britannia’s domestic volumes would increase by up to 2% over the three-month period.

The entire FMCG industry is reeling from the pressure on margins due to soaring input costs.

Management said the company has delivered consistent revenue growth in a challenging economic environment, reflecting its strength in execution and go-to-market strategy, as evidenced by its consistent gain in market share over the past 36 quarters.

Britannia chief executive Varun Berry said global factors continued to impact the economy, leading to a spike in inflation over the three-month period.

The company’s EBITDA margin – or the amount by which a company’s operating revenue exceeds its costs – fell 280 basis points year on year to 13.5% in the three-month period. month. CNBC-TV18 poll analysts had estimated the margin to be at 15.4 percent.

Independent market expert Ambareesh Baliga said Britannia had taken price increases but the challenge remained in the form of high input costs.

“Their input prices started to come down in the second half of the quarter. I think the full benefit of that will be felt in the second quarter (of the year ending March 2023),” he told CNBC-TV18.

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