Brokerages remained optimistic about Britannia Industries' growth prospects following its Q1 FY25 earnings, driven by rural market expansion and strategic initiatives. However, they acknowledge margin pressures faced by the company, with Britannia's gross margin falling by 150 basis points quarter-on-quarter to 43.4 percent. Britannia experienced a marginal increase in commodity costs especially in flour, sugar, and cocoa.
While Nuvama maintains a 'Buy' rating, Investec, Macquarie, and Morgan Stanley have 'Hold,' 'Neutral,' and 'Equal-Weight' ratings, respectively. Investec, with its target price of Rs 5,541 per share, noted the risk of earnings downgrades due to margin misses. Macquarie and Morgan Stanley set target prices of Rs 4,700 and Rs 5,021 per share, respectively.
At 1:25 PM, Britannia shares were trading 0.3 percent lower at Rs 5,705. The stock saw an 11 percent gain over the past six months, in line with the Nifty 50's performance.
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Nuvama highlights Britannia's successful rural distribution expansion and product alignment, leading to faster rural market share gains compared to urban areas. The brokerage said that a strong monsoon is expected to revive rural demand in H2 FY25 and Britannia is well-positioned to benefit from this resurgence. Meanwhile, the brokerage said that it will remain cautious of commodity price fluctuations.
On August 2, Britannia Industries reported a consolidated net profit of Rs 524 crore for the June quarter, marking a 14.5 percent increase from Rs 458 crore in the same quarter of the previous fiscal year. Revenue for the company reached Rs 4,130 crore, a 4 percent rise from Rs 4,010.70 crore in Q1 FY24. The company also delivered high single-digit volume growth in Q1 FY25.
A Moneycontrol poll of ten brokerages showed Britannia's revenue growing 4 percent YoY to Rs 4,178 crore, with the net profit anticipated to increase nearly 13 percent YoY to Rs 517 crore.
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