Britannia delivers in-line bottomline growth in Q2: Key takeaways

Multiple measures sequentially helped the company sustain the shape of its business and record a 390 bps increase in operating profit during the quarter versus last year.

BCCL
The total expenditure for the company was Rs 2,822.02 crore, up about Rs 200 crore, which was in line with the revenue growth that the company delivered.
ET Spotlight
NEW DELHI: Thanks to the supply chain efficiencies, reduction in wastages and fixed costs leverage helped Britannia Industries continue its brilliant earnings growth to another quarter notwithstanding the negative impact of the pandemic.

In the previous quarter, the company had more than doubled their botomoline, while during the September quarter, too, its performance was at par with the Street expectations.

Here are key takeaways from the Q2 numbers of the cookie maker:
How much did the company earn?
Britannia Industries said its net profit stood at Rs 495.20 crore, up 23 per cent while sales grew 12.1 per cent to Rs 3,419.11 crore. Analysts in an ET Now poll had projected the company to report a net profit of Rs 498 crore.


How was the operating profit?
Multiple measures sequentially helped the company sustain the shape of its business and record a 390 bps increase in operating profit during the quarter versus last year. “We sustained a large part of the efficiency gains that we witnessed in the previous quarter viz., supply chain efficiencies, reduction in wastages and fixed costs leverage,” the management said.

How did inflation impact the company?
The costs for the company were stable. The total expenditure for the company was Rs 2,822.02 crore, up about Rs 200 crore, which was in line with the revenue growth that the company delivered.
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“On the cost front, we witnessed moderate inflation in the prices of key raw materials and expect the prices to be stable going forward given the positive outlook on monsoon and harvest,” the company said in a statement.

What is the outlook on future growth?
The company said it is keeping a close watch on macro-economic factors, changes in laws, evolving consumer behaviour and is framing medium-term strategy laying out scenarios to deal with this dynamic environment. We are confident of performing well in these tough times with the agility in our action and passion of the team, Britannia added.

Management take
“In this quarter, we got our full range of products to the market, focussed on efficiency in distribution, followed continuous replenishment system of distribution, improved the health of our distributors and inched closer to normalcy in advertising and promotions. The nimble culture and the hard work put in by the team helped deliver a resilient performance in these challenging times. All the adjacent businesses, too, delivered a healthy profitable growth,” said Varun Berry, Managing Director, Britannia.

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Analyst take
“I think Britannia looks pretty decent [in the FMCG space]. They have done some very good launches in non-biscuits, which are wafers and salted snacks that are shaping up well. Also, they have done very well on the premium segment in cookies. So, in biscuits there are plain biscuits, cream biscuits and you have the premium cookies. So not only have they done new launches, they have also launched the smaller sizes,” said Gurmeet Chadha of Complete Circle Consultants

Valuation
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Similar to its peers, the company commands rich valuations. At Rs 3,778.80 per share, it trades at 51.55 times its earnings and 21 times its book value. The return on equity (RoE) stands at 40.94.
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