Britannia will need to amp up to fight its competitors. India government decision to ease the lockdown as a way to move the country’s economy gave a chance to other consumer goods companies but slowing down Britannia biscuit’s business at the same time. Though the company’s result is still applaudable, its shares might be on risk.
Britannia’s growth is shortlived?
Britannia Industries Ltd was one of the many biscuit companies in India that benefitted from the skyrocketing demand due to the pandemic. Quoted from Mint, the report of the company’s June quarter operating revenue showed a 26.4% year-on-year jump. With that, Britannia became India’s best-performing company among several other consumer goods companies of the same period.
However, Britannia failed to maintain the digit after India’s government eased lockdown. Britannia reported an 11% quarter revenue in September, around 4%-5% lower than what experts had predicted. Britannia’s volume growth for the last quarter is only 9%, while the estimated amount for the June quarter was 22%. The slow down in Britannia’s revenue growth is still notably higher than pre-covid growth.
India government eases lockdown, Britannia weakens
JM Financial analyst commented that a more lenient lockdown may have contributed to Britannia’s performance. As an attempt to unlock the economy, India government has eased the lockdown. With it, numeral regional players’ products and local snacking options have started to reopen. Customers have since then shifted into other products for comfort food.
Britannia’s stock also affected
Britannia’s slow business impacted its stock price. Noted from Mint, as of Tuesday’s closing Britannia stock slipped 6%. Despite the stumble, Britannia still beat its pre-covid peak in February by 9% higher. Bloomberg data suggests that investors are deliberating upon Britannia’s future. With inter-corporate deposits (ICDs) becoming investors’ concern, revenue growth has also become a key worry for the stock.
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