Britannia Q1 pre-tax profit jumps 88% to Rs 737 cr, revenue rises 26%

Foods company Britannia reported a stellar quarterly growth on Friday posting a profit before tax of Rs 737 crore for Q1FY20, a rise of 88 per cent when compared to the corresponding period of the previous fiscal.

The net profit for the biscuit maker grew 117 per cent to Rs 546 crore on YoY basis. The consolidated revenue of the Bengaluru-headquartered firm witnessed a strong growth of 26 per cent on a YoY basis at Rs 3,384 crore, ahead of expectations. 

The company’s volume growth for the period underreview stood at 22 per cent, higher than analysts' expectations of 17-20 per cent. 

Such a strong performance presents a very high base for the company. “What we have seen in the past is once you build a base, you find ways of growing beyond that so you might not see similar growth as we go forward but we would stride to grow over that base as we go forward,” said Varun Berry, Managing Director of Britannia Industries during an investor call on Friday.  

The company, which is currently running with a stock of 2-3 days, said its nimble culture helped it quickly adapt to the Covid-19 situation and meet the market demand.

“As soon as the lockdown was eased, we focussed on getting our distribution back to the pre-Covid levels and increasing our rural and hinterland reach. During this period, we also launched ‘Winkin Cow Lassi’ and a Rs 5 layer cake pack to expand our reach. All the adjacent businesses too delivered a healthy profitable growth,” he said.  

On the cost front, the company witnessed moderate inflation in the prices of key raw materials and expects the prices to be stable going forward given the positive outlook on monsoon and harvest.

“Given the dynamic nature of the pandemic and associated uncertainty, we were quick to resort to cost efficiencies through extraction of supply chain efficiencies, reduction in wastages and fixed costs leverage. We also rationalised media spends considering the constraints of inventories due to higher market demand. These measures helped us improve the shape of our business and record a massive 670 bps increase in operating profit during the quarter,” he said.

According to experts, another round of lockdown will further add to Britannia’s growth.

“With lockdown again coming back across most states, this in fact works well for Britannia because of more in-home consumption,” said Abneesh Roy of Edelweiss Financial Services.

Company sets Rs 700 crore as capex outlay
 

Britannia has announced an additional capital expenditure of Rs 700 crore in the next 2-3 years. MD Varun Berry said the firm would be putting up a new plant in Bihar, Tamil Nadu and UP, which is emerging the second-largest market for Britannia. This would be the firm’s first plant in the Hindi-speaking state.

BS Reporter