Most analysts cut target prices for Britannia Industries Ltd. citing a disappointment in gross margin on an increase in ad spends and higher cost inflation.
The maker of Good Day and Tiger biscuits also saw its profit fall for the first time in six quarters amid rising input costs and a shutdown last month to implement three digital projects. Its revenue and operating income, however, rose over the year earlier in the three months ended March.
Varun Berry, managing director at Britannia, said the year has been “difficult and challenging in every possible way” for the company. The shutdown of operations due to three transformational digital projects impacted primary billing for the quarter. “Despite the adverse conditions, we managed to deliver good results in terms of top-line growth, profitability improvement and market share gains.”
Berry also said the company’s evaluating the long-term impact of rising input costs to action necessary price increases. “On the commodity cost front, palm oil, packing material and dairy products witnessed sudden and steep increases while strategic buying helped the company manage the cost increases better.”
Shares of Britannia Industries were trading down 1.12% around 1 p.m. on Wednesday compared with a 1.41% gain in the benchmark Nifty 50.