Britannia share jumps 5% to hit record high on stellar Q3 earnings

Shares of Britannia Industries rallied over 5% in intraday trade on Thursday after the packaged foods company reported strong earnings for the third quarter ended December 31, 2022. The share price of the company, a part of the Wadia Group headed by Nusli Wadia, touched an all-time high of ₹4,596.65 on the BSE, breaching its previous high of ₹4,535 hit on December 19, 2022.

Reacting to Q3 earnings, Britannia share price opened 3% higher at ₹4,502.05 against the previous closing price of ₹4,369.30 on the BSE. Extending opening gains, the FMCG stock rose 5.2% to ₹4,596.65, while the market cap climbed to ₹1.1 lakh crore. On the volume front, 31,000 shares changed hands over the counter on the BSE against the two-week average volume of 5,225 stocks. The counter touched a 52-week low of ₹3,050 on March 8, 2022.

Britannia shares have outperformed the Sensex and BSE FMCG index in terms of one year returns, 3 months and 1 month returns. The stock has given 24.4% returns to its shareholders in a year compared with 20.8% and 1.45% growth in the FMCG index and the BSE Sensex. The counter rose 20% in three months and 5.6% in a month as compared to 2% and 3% growth in FMCG index in the corresponding period.

In a post market release on Wednesday, Britannia Industries said it posted 152% rise in consolidated net profit to ₹932.40 crore in Q3 FY23, against a profit of ₹369.18 crore in the year-ago period, aided by exceptional gain of ₹359 crore. The consolidated revenue from operations grew 16% to ₹4,101.49 crores as against ₹3,530.70 crore in the corresponding quarter last fiscal.

"The net profit includes an exceptional gain (net of tax) of ₹359 crore pursuant to a Joint Venture agreement with Bel SA for the Cheese business and consequent sale of 49% equity stake in its subsidiary & fair valuation of the residual stake of 51%," Britannia said in its filing.

For the nine months ended December 2022, the consolidated sales grew 16% to ₹12,093 crore, operating profit rose 24% to ₹1,869 crore, and net profit (including exceptional item) climbed 54% to ₹1,763 crore.

Varun Berry, Vice Chairman & Managing Director, said, “We have witnessed positive growth momentum over the last few quarters. Our Go-to-market strategy and investments in brands & innovation have helped us register a robust topline growth of 16% YoY. Our growing consumer franchise and Brand strength is evident in the consistent market share gains over the past 39 quarters. Continued focus on enhancing direct reach coupled with Rural agenda have helped us deliver solid growths over the past few quarters.”

“On cost & profitability front, our pricing actions and intensified cost efficiency program helped mitigate the inflation. On the back of opportunistic buying and moderation in inflation this quarter, our operating margins improved by 330 Bps. We are being vigilant of the competitive actions in the marketplace and shall deploy appropriate pricing actions to drive market share,” he added.

In November last year, the company entered into a strategic partnership with French cheese maker Bel SA to offer Indian consumers a range of nutritious, delicious and accessible cheese products. As a part of the joint venture, Britannia will sell 49% equity stake in Britannia Dairy Pvt Ltd to Bel SA for ₹262 crore, as per the terms of share purchase agreement between the two companies.