Stocks with an underlying consumer theme have been the darlings of the market for two years now. The stock of Britannia Industries has benefited from this market fancy - its valuations skyrocketed to 43 times trailing earnings from the 34 times in early April last year.

The company which operates in the biscuits, breads and dairy categories has a clutch of strong brands such as Good Day, Marie, Nutri Choice, 50-50, Slimz cheese and so on.

Britannia began to turn up focus on the premium variants of brands, which offer better margins. Increasing share of the non-biscuit category also reduced the risks of the company's narrow product portfolio.

But rising inflation squeezing consumer wallets led to a deceleration in revenue growth. Revenues grew 15 per cent for the December 2011 quarter, down from the 21 per cent in the March 2011 quarter as consumers scaled down purchase of packaged foods.

But a combination of lower inputs costs, as flour and sugar prices stabilised, and lower interest outgo spurred a record net profit growth of 45 per cent for the December 2011 quarter.

For the nine months ending December 2011, operating margins inched up to 6.8 per cent from 6.3 per cent a year ago. Net margins improved to 4.3 per cent against the 3.5 per cent in the same periods.

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