Shares of Britannia Industries (Britannia) slumped as much as 5 percent on Tuesday after the company's earnings for the September quarter missed Street's estimates. The stock was the worst hit on Nifty50 today.
At 9:17 am, shares of Britannia were trading 4.3 percent lower at Rs 3,560 on the BSE.
The fast-moving consumer goods company reported a 23 percent Year-on-Year (YoY) fall in net profit to Rs 381.8 crore for the quarter ended September. Revenue, though, was up 5.5 percent YoY at Rs 3,607.4 crore for the reporting quarter.
Analysts in a CNBC-TV18 poll had predicted the company's net profit at Rs 495.2 crore over revenue of Rs 3,560 crore.
"During the quarter, the impact of the second wave of Covid-19 started receding, and the economic activity started picking up. However, inflationary trends remained rampant around the globe, across sectors," said Varun Berry, Managing Director, Britannia.
Berry added that on the cost front, the global economy continued to witness supply led constraints across various input materials fuelling inflation.
“As a result, we are witnessing unprecedented inflation in market prices of palm oil at 54 percent, industrial fuel at 35 percent and packaging materials at 30 percent leading to overall inflation in the quarter of around 14 percent. While we have been able to partially mitigate the impact through strategic forward covers and accelerated cost efficiency programs, we have also initiated necessary price increases across the portfolio all of which will address the cost-push and normalise profitability,” he said.
“We are confident that our resilient brands and strategic growth initiatives will hold us on a path of profitable share gain in the future as well,” Berry added.
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Britannia told CNBC-TV18 that its domestic volume growth stood at 2 percent as compared to CNBC-TV18 Poll of 4-5 percent growth.
JP Morgan has maintained an 'overweight' rating on shares of Britannia and believes price hikes and cost measures are in place to support the FMCG player's profitability going ahead.
Macquarie also noted that the company expects profitability to normalise going ahead aided by recent price hikes. Price hikes are taken to offset input cost pressures, said Macquarie that has a 'neutral' call on the stock.
Nomura which has a 'neutral' rating on shares of Britannia said that demand is holding up well but margin, not so much.
First Published: IST