The share price of Britannia Industries grew by more than 5% to hit a fresh 52-week high on Monday, after the firm posted robust earnings for the quarter ended June 2020 with good volume growth.
Britannia Industries reported a 117 per cent rise in consolidated net profit to Rs 542.6 crore in the first quarter of fiscal year 2021 compared to a net profit of Rs 248.64 crore in the same period last year.
The firm's revenue from operations during the quarter increased to Rs 3.420.7 crore, compared to Rs 2.700.35 crore, YoY. Revenue was higher than the Rs 3,255 crore forecast. Britannia's volume growth was 22 per cent, compared to an average 18-20 per cent.
CLSA has raised its earnings outlook by 18 percent for 2021 and sees CAGR revenue and earnings between 12 percent and 17 percent over the next three years. CLSA takes the view that the near-term outlook of the company looks robust and the company is optimistic that double-digit category growth will continue in the near term.
"We advise investors to increase their weight in Britannia, given that they are relatively insulated from COVID-19 vagaries, only a few companies within FMCG, where almost the entire product portfolio is 'important' and are capable of delivering market-leading growth," the brokerage said.
"Gross margin expanded about 115 bps year-on-year (YoY) to 41 percent owing to benign input costs and focus on Pareto principle – concentrated on 20 percent of the products/SKUs which in turn contributed 80 percent of the volumes. However, as consumer seeks more varieties/options, it has made available full range of products towards mid-June which should further aid the cause of premiumisation," Phillip Capital said.
"Britannia has delivered a fantastic Q1FY21 on the back of the lockdowns-led strong momentum for its categories and excellent results in overcoming logistical challenges. Even though a repeat of Q1 on growth or margins is impossible, we do assume that a super-strong momentum will be sustained for at least another quarter or two," Kotak said.