However, analysts remain unconvinced saying that Britannia’s group exposure was an overhang. “While Britannia has been historically giving loans to group companies, it is still a factor to watch out for,” Abneesh Roy, senior vice-president, research (institutional equities), Edelweiss, said. On Wednesday, Britannia reported a nearly 12 per cent increase in net profit to Rs 294 crore for the quarter ended March 31 versus Rs 263 crore a year ago. Net sales increased 10 per cent to Rs 2,764 crore in the quarter under review versus nearly Rs 2,510 crore a year ago.
“There is certainly some concern here because this money could have been given as dividend to shareholders rather than lending the same to associate companies,” said an analyst requesting anonymity. “But the Rs 350-crore investment (in Bombay Dyeing) has also been constant in FY17 and FY18 even as ICDs to Bajaj Finance and PNB Housing Finance by Britannia have grown in the same period,” he said.
In FY18, ICDs to Bajaj Finance nearly doubled to Rs 201.8 crore from Rs 102.75 crore the previous year. In PNB Housing Finance’s case, the growth was even sharper in FY18, at five times the amount in FY17, which stood at Rs 25 crore. The break-up of ICDs in other companies
by Britannia for FY19 has not been disclosed. It is important to note that rating agency CARE has put the long-term debt facilities and deposits of PNB Housing Finance on watch in its latest report dated April 29 over concerns mainly in relation to weakness in the real estate sector as well as the latter’s exposure to corporate loans.
CARE also said in its April 29 report that it would monitor developments at PNB Housing Finance when reviewing its rating in the future.
At close of trade, Britannia’s stock price stood at Rs 2785.50 per share, down 3.72 per cent on the BSE. It touched an intra-day high of Rs 2952.20 per share and a low of Rs 2785.30 per share.