Britannia shares jump 7% after the company puts out robust Q4 profit, driven by lower tax cost

• Britannia share price zoomed over 7% on June 3, a day after putting out robust Q4 earnings.
• The company reported a 26% rise in net profit to ₹372 crore for the fourth quarter ending March 31.
• The company's total revenue was up 2% year-on-year (YoY) to ₹2,807 crore.

Biscuits and bakery products maker, Britannia share price, zoomed over 7% within a few minutes of trading on June 3, a day after putting out robust Q4 earnings. The company saw a 26% rise in consolidated net profit to ₹375 crore for the fourth quarter ended March 31, driven by lower tax cost.
Its total revenue was up 2% year-on-year (YoY) to ₹2,807 crore compared to ₹2,764 in the same period last year. "After 9 months of moderate growth, we started to see growth coming back in the first months of this quarter which was then hit by COVID 19 and the lockdown in March," said Varun Berry, Managing director of Britannia Industries.

After the initial uptake, the shares were trading 5% higher at ₹3,619 a piece on the National Stock Exchange (NSE) at around 10:00 am.

In the first three weeks of March, Britannia's share price took a massive hit because of the coronavirus pandemic, subdued sales and bad consumer sentiments. The share price declined over 28% in March till the announcement of the first phase of the lockdown— on March 23. However, being a manufacturer of essential commodities— which saw less disruption in the time of lockdown — and Britannia's share price recovered over 69% to date.

Broking firm Motilal Oswal expected around 16% rise in profit with revenue growth around 2.2% with flat sales volumes YoY.


Operating during the lockdown wasn't cheap

"On the cost front, we witnessed moderated inflation in the prices of key raw materials for the bakery business. Commodity prices at a global level too witnessed moderation due to low demand on account of the lockdown in most parts of the world," said Berry.

Despite the increase in costs, Britannia reported an increase of 40 basis points (bps) in its operating margins during the fourth quarter. A hundred bps make up 1%.

The FMCG (fast-moving consumer goods) major earlier said that it was using only 65% of its installed capacity and is "better poised" to tackle challenges in the extended lockdown period.

"While the business dynamics has changed in the last few weeks, we are now better poised to tackle the situation. With close to 65% manufacturing capacity utilisation till now, we have stepped up efforts to address the challenge of inadequate labour in our factories," said Berry at the time.
SEE ALSO: Varun Berry’s Britannia cut down costs enough to make a fat profit despite a sharp slowdown

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