Britannia Falls 3.7% Despite Q1 Growth; Bullish Chart Setup
Britannia Industries, the leading Indian food company, has witnessed a 3.7% decline in its shares despite reporting an 8.7% year-on-year (YoY) revenue growth to ₹4,622 crore in the first quarter (Q1). The decline in shares has left many investors and analysts perplexed, as the company’s financial performance appears to be strong. However, closer examination of the company’s financials and technical charts reveal a bullish setup that could drive the stock higher in the coming days.
Revenue and Margin Performance
Britannia’s Q1 revenue growth of 8.7% YoY is a significant achievement, considering the current economic environment. The company’s ability to maintain stable margins at 13.4% YoY is also a positive sign, indicating its ability to manage costs effectively. However, the company’s profit after tax (PAT) rose only 3% YoY, which is lower than the revenue growth.
Despite this, the company’s PAT declined by 7% quarter-on-quarter (QoQ), which could be a cause for concern. However, analysts remain optimistic about the company’s prospects, citing its strong brand portfolio, premiumisation strategy, and innovation efforts.
Technical Analysis
According to Rajneesh Sharma, an analyst at SEBI RA, the company’s stock is set for a bullish breakout above ₹5,978. Sharma’s analysis is based on the company’s technical charts, which show accumulation and a strong upward trend.
The company’s stock has been consolidating in a narrow range of ₹5,500 to ₹6,000 since the beginning of the year. The recent correction has brought the stock closer to the lower end of this range, making it an attractive buying opportunity.
Retail Sentiment
Despite the company’s strong financial performance and bullish chart setup, retail sentiment has turned bearish. Many investors have been selling their shares, citing concerns about the company’s PAT growth and the overall market volatility.
However, analysts remain optimistic about the company’s prospects, citing its strong brand portfolio, premiumisation strategy, and innovation efforts. The company’s ability to maintain stable margins and its strong cash flow position are also seen as positive signs.
Conclusion
Britannia Industries’ Q1 financial performance may have raised some eyebrows, but a closer examination of the company’s financials and technical charts reveals a bullish setup that could drive the stock higher in the coming days. With its strong brand portfolio, premiumisation strategy, and innovation efforts, the company is well-positioned to continue its growth momentum.
For investors looking to buy into the company’s growth story, the recent correction has brought the stock closer to the lower end of its consolidation range, making it an attractive buying opportunity. However, investors should also keep an eye on the company’s PAT growth and the overall market volatility.
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