The share price of Britannia Industries fell 5 percent on Tuesday after the company announced its September quarter (Q2) results as the company missed volume growth expectations.
The stock fell as much as 5.2 percent to the day's low of Rs 3,575 per share on BSE. In 2020, the stock is up 19 percent.
The company's overall performance, however, was ahead of estimates including better-than-expected margins.
The FMCG major reported a 22.96 percent increase in consolidated net profit at Rs 495.20 crore in Q2 as compared to Rs 402.73 crore in the year-ago period.
Total revenue from operations climbed 12.15 percent to Rs 3,419.11 crore during the quarter under review as against Rs 3,048.44 crore in the year-ago period. Revenue growth of 12 percent YoY was slightly higher than the expected decline in growth trajectory from a 27 percent growth witnessed in 1Q.
Whereas, total expenses were at Rs 2,822.02 crore, up 7.80 percent from Rs 2,617.64 crore earlier.
In an earnings review report, Yes Securities said, "We maintain our neutral stance on the stock for now and will revisit our estimates post the earnings call. While higher than industry growth prospects in the current environment given the affordability and aggressive innovation and ramp-up indirect distribution are key positives, limited success in non-biscuit segments and risks to the current level of margins offset the positives to a large extent. Recent underperformance though has brought down valuations to 40x FY23E earnings, which can drive some upside in the near-term."
Post the earnings, Britannia Industries Managing Director Varun Berry said that this quarter the company got its full range of products to the market, focussed on efficiency in distribution, followed continuous replenishment system of distribution and inched closer to normalcy in advertisement and promotions.
Besides, all the adjacent businesses delivered a healthy profitable growth, he said.
"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," he added.
(With inputs from PTI)