India's Britannia hits record high on Q3 profit surge

Biscuits pass along a conveyor belt after being baked at the Britannia factory in New Delhi
Biscuits pass along a conveyor belt after being baked at the Britannia factory in New Delhi June 3, 2011. REUTERS/Adnan Abidi/Files

BENGALURU, Feb 2 (Reuters) - Shares of India's Britannia Industries (BRIT.NS) surged to a record high on Thursday, a day after the maker of Good Day and Little Hearts biscuits reported its third-quarter profit more than doubled.

Britannia shares surged as much as 5.1% to an all-time high of 4,595 rupees. They were up 4% in late afternoon trading, set for their biggest one-day jump since an 8.8% surge on Nov. 7 after strong second-quarter results.

The company said on Wednesday that third-quarter profit surged 151% to 9.32 billion rupees (about $114 million) due to higher prices, resilient demand and a one-time gain of 3.76 billion rupees from a stake sale.

Britannia's operating margins rose 330 basis points, which the company said was due to price increases and moderating costs for raw materials.

"Britannia is likely to pass on the benefits of input cost correction through grammage increase to continue its market share-gain trajectory amidst a not-so-buoyant demand backdrop," ICICI Securities analysts said.

Packaged food companies have been raising prices and resizing packaging to shore up margins against higher commodity and freight costs.

Britannia has also been investing in new product launches, with items such as Biscafe and Golmaal biscuits, that, analysts say, will help it maintain market share even as consumers cut back on discretionary spending.

This helped its consolidated total revenue from operations increase 17.4% to 41.97 billion rupees last quarter.

Britannia's shares were the second-biggest gainer on the benchmark Nifty 50 index (.NSEI), which was down 0.13%.

Reporting by Varun Vyas and Yagnoseni Das in Bengaluru; Editing by Savio D'Souza

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