Macquarie has downgraded Britannia Industries from neutral to underperform, reducing the target price to ₹4,800 from ₹5,200. This suggests a potential downside from the current market price (CMP) of ₹5,038.00. The downgrade is attributed to growth risks and recent earnings challenges.
The brokerage has cut Britannia’s FY25/26/27 EPS estimates by 11% each, factoring in a Q2 EBITDA miss. This miss was driven by weak gross margins and higher employee costs. Rising palm-oil prices have further intensified inflation concerns, and without a moderation in wheat and cocoa prices, Macquarie sees a risk to H2 margins.
Additionally, Macquarie points out that urban demand concerns are not fully reflected in Britannia’s current valuation, which stands at 56x FY26E EPS.
Disclaimer: This article is for informational purposes only and should not be considered as financial advice. Please consult a financial advisor before making any investment decisions.
