Britannia shares drop 9% in two days, hit 5-month low as Q2 profit slips 9.6%

Britannia Industries shares slid by 3.7 per cent in early trading on November 12, 2024, touching an intraday low of Rs 5,220 on the BSE. The stock has declined 9 per cent over the past two trading sessions, marking its lowest point since early June.

The fall in Britannia's share price follows a weaker-than-expected Q2FY25 earnings report. The company posted a consolidated profit after tax (PAT) of Rs 531 crore, down nine point six per cent from Rs 588 crore in the same quarter last year. The decline in profitability is attributed to inflationary pressures and increased operational costs.

The biscuit maker’s revenue from operations grew five point three per cent year-on-year to Rs 4,668 crore, driven by an eight per cent rise in volumes. However, this fell short of analysts' forecasts, with some expecting revenue to be closer to Rs 4,740 crore.

Margins under pressure

Britannia’s gross profit margin contracted by 135 basis points year-on-year, landing at 41.5 per cent due to rising input costs, particularly for key commodities like wheat and cocoa. The operating profit margin (EBITDA margin) also declined to 16.8 per cent, a drop of 290 basis points year-on-year, impacted by higher employee expenses.

Ebitda for the quarter stood at Rs 783 crore, down ten per cent from Rs 872 crore in the previous year. The company’s performance was further hindered by a 45 per cent year-on-year increase in employee costs, which analysts noted as a one-off but substantial impact.

Market reaction and stock performance

At 10 AM, Britannia shares were trading at Rs 5,250, down three point five per cent. The stock's recent decline contrasts with the broader market trend, as the BSE Sensex edged up slightly by 0.1 per cent. Investors are now looking forward to the earnings conference call for further guidance and outlook on margin recovery.

Britannia’s share performance year-to-date has been lacklustre, underperforming the BSE Sensex. The stock’s fall reflects concerns over squeezed margins and missed earnings expectations, even as revenue growth remains intact.