Britannia trades nearly 1% higher ahead of Q2 nos; here's what to expect

Nirmal Bang Securities says that Britannia is expected to deliver a healthy growth in Q2FY1 like Q1FY21, though at a tapered rate.
Shares of Britannia Industries, the fast-moving consumer goods (FMCG) major, gained nearly a per cent on the BSE on Monday ahead of its September quarter (Q2FY21) results due later in the day. According to a recent Business Standard report, the FMCG sector is upbeat on the second quarter numbers, pointing towards the demand revival driven by the relaxation in restrictions as well as consumers adjusting to the new normal. READ MORE

Analysts at Edelweiss Securities estimate Britannia’s revenue, earnings before interest, taxes, depreciation, and amortisation (EBITDA) and net profit (PAT) to jump 15 per cent, 31.8 per and 23.8 per cent year-on-year (YoY), respectively. It expects the company to post volume growth of nearly 12 per cent YoY on a base of 3 per cent (Q1FY21 saw 21.5 per cent volume growth on a base of 3 per cent). "On the margin front, raw material trend is benign and that combined with operating leverage and cost efficiencies will aid EBITDA margin; hence, we estimate 240bps YoY margin expansion," the brokerage said in a result preview note. 

Those at Nirmal Bang Securities say that Britannia is expected to deliver a healthy growth in Q2FY1 like Q1FY21, though at a tapered rate. "We expect the company’s sales growth to come in at 18.0% YoY, led by base business volume growth of 13.0% versus a lower base of 3.0%. EBITDA margin is likely to expand by 383bps YoY to 20.1% on account of declining prices of key raw materials and cost efficiencies. Adj. PAT is estimated to grow by 35.7% YoY, lower than EBITDA growth of 46.0% YoY on account of higher tax rate compared to the base quarter," the brokerage added. 

At 10:34 AM, Britannia was trading 0.87 per cent higher at Rs 3,780 on the BSE. In comparison, the S&P BSE Sensex was trading 1.2 per cent higher at 40,464 levels. 


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