JimJam manufacturer Britannia Industries will share its earnings report for the three months ended June on August 2, 2024. The biscuit maker will see higher volume growth compared to peers as a result of its price cuts.
According to a Moneycontrol poll of ten brokerages, Britannia Industries is likely to report a four percent revenue growth at Rs 4,178 crore. Net profit is likely to come in at Rs 517 crore from Rs 458 crore from the corresponding quarter last year.
Earnings estimates of analysts polled by Moneycontrol are in a narrow range, so any positive or negative surprises may elicit a sharp reaction in the stock. The most optimistic estimate sees Britannia’s net profit jumping 20 percent on-year.
What factors are impacting the earnings?
Amid the harsh summer, out-of-consumption will be impacted, where Britannia will have a volume impact, noted experts.
Price cuts: “Price actions in select SKUs are likely to arrest competition and aid the company in gaining market share. As the company has affected price actions, we see a 45 bps YoY gross margin contraction to 41.5 percent,” said Emkay Global.
Volume growth: The biscuit maker will see higher volume growth compared to peers as a result of its price cuts and rising grammage, as competitiveness in the industry grows. Brokerages are forecasting a 7 percent volume growth, tad better than 4Q. However, price cuts will restrict sales growth.
Margins: Gross margins are expected to contract around 65 basis points, as price cuts/higher grammage offsets the impact of soft RM prices (excluding wheat, which was up slightly on a sequential basis).
What to look out for in the quarterly show?
Analysts will closely monitor demand in metro areas, rural settings and tier-3 towns. They will also pay attention to raw material prices and their effect on EBITDA margins, as well as the growing competitive pressure from unorganized players.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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