InvestorQ : Why Britannia Industries Ltd. stock price is falling despite decent quarterly results?
Divyansh Agrawal made post

Why Britannia Industries Ltd. stock price is falling despite decent quarterly results?

Answer
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Mary Joseph answered.
1 year ago


The June quarter was actually not bad with the company maintaining its growth. What investors are worried about is the future growth. There are two factors that have caused this 25% correction in the stock price of Britannia.
Firstly, the stock has been traditionally grown at a rapid pace due to its focus on a very niche high value market place. However, the competition in that market place has been getting much tighter with the entry of new players like Parle in a big way. That is expected to result in lower market share and impact profits in the quarters ahead.

Secondly, Britannia had sustained valuations of 50-55X times its earnings purely because of its ability to sustain growth at much higher rates in the niche segments. With the competition hotting up in these niche segments, there is now a worry that Britannia may find it hard to sustain such rich valuations. It is this combination that is driving the price down. However, at current levels, the risk appears to be quite low and the risk-reward favorable.