Britannia – Good Day? GREAT QUARTER!

Britannia Industries Limited (BIL) is an Indian company specialised in the food industry. The company is a part of the Wadia Group which is headed by Nusli Wadia. The company was founded in 1892 by a group of British businessmen with an investment of ₹295. The company is headquartered in Kolkata. It is one of India’s oldest companies and is renowned for its biscuit products.

Britannia Industries is one of India’s leading food companies with a 100-year legacy having annual revenues leading ahead of Rs 9000 crore. Britannia is among the most trusted food brands, and manufactures India’s favourite brands like Good Day, Tiger, NutriChoice, Milk Bikis and Marie Gold which are common household names in India. Britannia’s product portfolio includes Biscuits, Bread, Cakes, Rusk, and Dairy products including Cheese, Beverages, Milk and Yoghurt which are sold throughout India and internationally.

Quarterly Growth Walkthrough

Britannia Industries has registered a consolidated net profit of Rs 932 crore for the December quarter of which is tremendous growth of 152% from Rs 369 crore in the corresponding quarter of the previous fiscal year. The surge in profit was on behalf of a one-time award of Rs 375 crore. Excluding the one-time gain, the profit has grown by 50% Year-on-Year (YoY). The one-time award is regarding a Joint Venture agreement with Bel SA for the Cheese business and subsequent sale of 49 percent equity stake in its subsidiary and fair valuation of the residual stake of 51 percent.

Bel SA is the famous French cheese maker, the partnership with Bel will offer Indian consumers a world-class range of nutritious, delicious and accessible cheese products.

The revenue from operations was reported at Rs 4,197 crore which has grown by 17% from Rs 3,575 crore in the corresponding quarter of the previous year.

The company has reported that during the quarter, it has expanded its reach for a few of the adjacent categories including croissant & cakes and it has forayed into new categories. Many of the company’s new initiates namely Biscafe, Golmaal, NC Seeds & Herbs and Marble cake have performed extremely well and continue to grow aggressively quarter on quarter.

Britannia has also noted that its pricing actions and intensified cost efficiency procedures have aided to soften the inflation. With the support of opportunistic buying and moderation in inflation this quarter, the company’s operating margins enhanced by 330 basis points.

Word from the Board

Varun Berry, Vice Chairman & Managing Director of Britannia has made a statement that “We have witnessed positive growth momentum over the last few quarters. Continued focus on enhancing direct reach coupled with rural agenda have helped us deliver solid growths over the past few quarters. We are being vigilant of the competitive actions in the marketplace and shall deploy appropriate pricing actions to drive market share. Cheese is an under-penetrated category and this partnership will help us expand the nascent but fast-growing cheese category in India and being a leader in fulfilling evolving consumer needs”

Technical Analysis

Britannia Weekly Candlestick Chart on Sharekhan’s TradeTiger

Britannia stock price has made a break over its 161.8% retracement level and the price faces resistance due to profit booking. The next target for this stock is the 261.8% retracement level at Rs 5679 which can be achieved in the long-term. Investors should accumulate this stock on deep corrections when the price approaches the 200-day exponential moving average. Presently the MFI is at 84 points and the price has overextended above the average which marks the stock as highly overbought. Traders can short this stock as the price may face heavy resistance on the upside in the short-term.

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