Shares of Britannia Industries (BRIT.NS) rose as much as 4.7% on Friday after the biscuits maker posted higher quarterly profit and signalled stronger demand, prompting analysts to reaffirm its growth outlook despite lingering cost pressures.
Demand for packaged foods remained resilient in the June quarter as steady consumer spending drove volume growth, allowing companies such as Britannia to navigate volatile commodity prices and supply-chain disruptions.
Demand is holding up... we have exited the quarter on a very positive note," CEO and Managing Director Rakshit Hargave said on an earnings call.
Britannia forecast on Thursday an improving domestic demand environment to support growth, although it flagged geopolitical tensions in West Asia and volatile crude oil prices as risks that could push up input costs.
To protect margins, the company accelerated cost-efficiency measures, including packaging optimisation, wastage reduction, procurement efficiencies and greater use of alternate fuels and renewable energy.
While industrial fuel and laminate costs rose sharply during the quarter, Britannia said strategic hedges and these initiatives would help cushion the impact. Total expenses rose 7.3% to 42.62 billion rupees ($447.34 million).
Britannia reported a 13.4% rise in quarterly consolidated net profit to 5.91 billion rupees, while revenue from operations rose 8.2% to 50 billion rupees.
The results and outlook lifted investor sentiment. Shares jumped as much as 4.7% to 5,660 rupees on Friday, their highest level in three months.
Analysts at Macquarie said improving domestic demand and market share gains would be key near-term growth drivers.
Investec said easing supply-chain constraints could support margins and maintained its "hold" rating with a price target of 5,851 rupees.
Nomura said Britannia's low-single-digit price hikes supported volume growth broadly in line with expectations. The brokerage maintained its "buy" rating and a price target of 6,500 rupees.
($1 = 95.2750 Indian rupees)
