Britannia Industries jumps 10% ahead of board meet for interim dividend

Shares of Britannia Industries jumped around 10 per cent to Rs 3,243 on the BSE in early morning trade on Thursday ahead of the board meeting today to consider interim dividend. The stock of packaged foods company was trading close to its 52-week high price of Rs 3,444 touched on September 2019.

“A meeting of the board of directors of the Company will be held on Thursday, 23rd April 2020 to consider, the payment of interim dividend on the equity share capital of the Company for the financial year 2019‐20 to the equity shareholders of the Company,” Britannia Industries in an exchange filing on Monday, April 20.

The company has fixed May 2, 2020 as the record date for the purpose of ascertaining the eligibility of shareholders for payment of aforesaid interim dividend, it added.

Since announcement of board meeting for interim dividend, the stock of Britannia Industries has outperformed the market by surging 15 per cent in past three trading days, as compared to a marginal 0.07 per cent rise in the S&P BSE Sensex.

At 10:36 am, the stock was trading 6 per cent higher at Rs 3,134 apiece on the BSE. In comparison, the S&P BSE Sensex was trading 310 points or 1 per cent higher at 31,690 levels. 

Analysts at HDFC Securities say that the impact from Covid-19 on the FMCG sector will be sharper on revenues for companies in March quarter, despite many essential categories have witnessed pre-buying at offtake level in Mar. "Lockdown has impacted transportations and channel filling opportunities for the quarter. Trade inventory has reduced for most categories. Lockdown of the last 12 days will impact revenues by 13-15 per cent for the quarter for most companies. Channel filling benefits will add to FY21 revenues (nearly 3 per cent)," they wrote in an earnings preview note. 

The brokerage estimates weak Q4 performance by Britannia Industries. It expects company's net sales (revenue) to decline 2 per cent year-on-year (YoY) to Rs 2,740 crore. EBITDA (Earnings before interest, tax, depreciation, and amortisation) is seen declining 4 per cent YoY to Rs 420 crore. 

"We model 60 basis points (bps) dip in gross margin (GM) that would result in 33 bps contraction in EBITDA margin to 15.3 per cent," it says. Adjusted profit after tax (APAT) is likely to come in at Rs 320 crore, up 9.5 per cent YoY. 

Edelweiss Securities expects Britannia’s revenue and EBITDA to decline 6.9 per cent and 10.1 per cent YoY, respectively to Rs 2,605.5 crore and Rs 392.3 crore. PAT to grow 1.6 per cent YoY to Rs 299.1 crore. 

"We expect Britannia to post volume dip of nearly 8 per cent YoY on a base of 7 per cent (Q3FY20 saw 3 per cent YoY volume growth on a base of 7 per cent). Price hikes are about 1 per cent YoY. This quarter is mared by overall consumption slowdown which has worsened sequentially. We expect Britannia to be partially impacted in Q4FY20 by the outbreak of coronavirus however with Britannia primarily selling essentials the impact will be limited," the brokerage said in a results preview note.

Change in competitiveness post GST, especially after a rise in taxes in the value segment, commentary on new launches will be some if the monitorables to watch out for.