The demand for its biscuits during the nationwide lockdown has helped Britannia Industries register year-on-year growth in its net profit.
Up to 80 percent of revenue comes from biscuits, analysts say, which has helped the company to post robust growth in the quarter ended September.
Read: Britannia Q2 profit jumps 23% to Rs 498 crore, EBITDA margin beats estimates
Britannia sells biscuits such as Good Day and Nutrichoice in nine variants each and the 50-50 biscuit in four variants. The company’s recent focus on the premium segment has helped them rake in higher profits.
Britannia Industries, one of India's largest consumer goods companies, has reported a 23.2 percent year-on-year growth in consolidated profit at Rs 498.13 crore for the quarter ended September 2020, citing continued normalcy in operation.
However, the increase in profit in Q2 was below Q1 (April-June) of FY21. The company had registered a massive 117 percent YoY increase in consolidated profit for the quarter, driven by strong revenue and operational growth.
"Britannia's Q1 performance was boosted by pantry loading/stocking of essentials during the lockdown. However, growth got normalised in Q2 with logistics and supply improving overall in India by easing of lockdown norms," said Kaustubh Pawaskar, AVP-Fundamental Research at Sharekhan by BNP Paribas.
The rise in raw material price may have have limited the net profit of the largest biscuit maker in Q2. "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 & harvest," said Varun Berry, managing director, Britannia Industries.
The company's consolidated revenue grew by 12.1 percent year-on-year to Rs 3,419.11 crore in the July-September quarter.
Berry said that the company sustained a large part of the efficiency gains witnessed in the previous quarter such as supply chain efficiencies, reduction in wastages and fixed costs leverage.
These measures helped Britannia sequentially sustain the shape of business and record a 390 bps increase in operating profit during the quarter compared to Q2FY20.
He further pointed out the company is keeping a close watch on macro-economic factors, changes in laws, evolving consumer behaviour and are framing medium-term strategy laying out scenarios to deal with the dynamic environment.