Britannia hit by profit booking on rural headwinds

economictimes.indiatimes.com:

Britannia Industries have weakened of late as concerns over rural sales growth and troubles at group company Go First Airlines weighed down investor sentiment. The stock fell 4.2% in the past month to ₹4,818 on Tuesday as against the 0.6% advance in the Nifty FMCG Index. «There is an apprehension that sales may be impacted with slower recovery in rural areas than expected,» said Nirvi Ashar, fundamental research analyst at Religare Broking.

The company is scheduled to announce its first-quarter results on August 4. Some analysts, who spoke to ET on condition of anonymity, said there was some apprehension that the Wadia family, which owns Britannia, may need to provide financial support to revive the operations of Go First Airlines, which is undergoing corporate insolvency. Go First's resolution professional Shailendra Ajmera backed by EY has proposed to restart the airline's operations, which ceased on May 3.

For this, lenders have approved interim funding of ₹400 crore and are awaiting approval from the Directorate General of Civil Aviation (DGCA). Though Britannia neither owns any direct stake in Go First nor has it provided any funding to the airline, there are some worries that the food products maker would be asked to chip in. Some analysts said the Wadias would not want to involve Britannia in the Goa First matter in any way.

«I doubt if the company would step in to provide financial support to Go Air at this juncture,» said Sandip Sabharwal, a Mumbai-based investment advisor. «The fall in shares of Britannia is largely due to profit booking since there was a rally in the stock which has outperformed Nifty 50.» In the past year, the stock was up 27% against a 23.45% rise in the Nifty FMCG index. The benchmark Nifty