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Britannia shares jump the most since November 2022 to near record levels, become top gainer on Nifty 50
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Summary
Britannia share price: Despite the muted Q4 results, global brokerage firms Morgan Stanley and CLSA have maintained their overweight and outperform ratings, respectively, on the shares of the FMCG company
Britannia Industries shares rose almost 8% in intraday trade to become the top Nifty 50 gainer on May 6. The gain comes after the fast-moving consumer goods major reported its quarterly results, which were muted but almost in line with CNBC-TV18 poll expectations.
Britannia shares traded 7.68% higher at ₹5,109.20 on NSE at 12:16 pm. Even as the stock has risen after the January to March 2024 quarter result, so far in 2024 (year-to-date), it has erased 8% of investors’ wealth as compared to which has gone up 2.5% during the period.
The firm’s consolidated net profit declined 3.8% year-on-year to ₹536.61 crore as compared to ₹557.60 crore in the same period last year. The company’s revenue rose a percent to ₹4,069.36 crore, up from ₹4,023.18 crore reported in the corresponding period of the previous fiscal year.
On the operational front, Britannia experienced a slight decline in earnings before interest, taxes, depreciation, and amortisation (EBITDA) during the March quarter, dropping 1.7% to ₹785.5 crore compared to ₹800.9 crore in the corresponding period last year. Margins also decreased marginally by 50 basis points to 19.4%.
Despite the muted Q4 results, global brokerage firms Morgan Stanley and CLSA have maintained their overweight and outperform ratings, respectively, on the shares of the FMCG company, which owns brands such as Good Day, Tiger, NutriChoice, Milk Bikis, and Marie Gold.
CLSA has set a target price of ₹5,636 on Britannia shares, implying that it sees a potential upside of 18% from the closing price of ₹4,744.60 on May 3. The brokerage noted that the revenue growth was 2% below its expectation while absolute EBITDA and profit after tax (PAT) came in at 3% and 1% lower than its projection.
Morgan Stanley, meanwhile, expects the stock to rise to ₹5,243, meaning it sees a potential upside of 10.5%. The analyst pointed out that the firm’s revenue was up 8% on a five-year compound annual growth rate (CAGR) basis, which is similar to that in Q2.
Also Read | FMCG Q4FY24 preview: Analysts on lookout for demand recovery signals
Though Motilal Oswal called Britannia’s Q4 results an “uninspiring show,” it highlighted that the company’s market share revived due to the pricing action taken to remain competitive and higher investments in brands supported by distribution expansion.
Following the results, Britannia’s Vice Chairman and Managing Director Varun Berry asserted that the company showed resilience in a challenging economic climate. He highlighted that strategic pricing measures were taken during the quarter under review to maintain competitiveness and expand distribution channels, particularly in rural areas.
Britannia said it remains cautiously optimistic, keeping a close eye on commodity prices and global geopolitical developments. The company intends to maintain its focus on cost-efficiency initiatives while continuing to invest in brand building and market share expansion.
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