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Informist, Wednesday, Feb. 5, 2025

By Anjana Therese Antony

MUMBAI – Ahead of the December quarter financial results of Britannia Industries, due on Thursday, traders added downside bets to the options chain of the company. Though the company's volume and market share may have increased, its bottom line is most likely to decline from the year-ago figures. This will be despite the festival season during the three months. Britannia, along with most other fast-moving consumer goods stocks, could retain their upside supported by the major tax relief announcement from the government as the current tariff threats from the US have dented sentiment. 

The fast-moving consumer goods giant's consolidated net profit is seen declining 7% on year to INR 5.2 billion, while revenue may rise over 5% to INR 44.9 billion, according to the average of estimates of 16 broking firms. On Tuesday, the stock closed 1.9% lower at INR 4,932.65 on the National Stock Exchange. It has fallen 24% from its record high of INR 6,469.90 hit on Oct. 3, 2024. 

In the options chain of Britannia Industries, premiums on INR 4,950-INR 5,700 call options expiring Feb. 27 declined 23-26%, while those on INR 4,950-INR 4,550 put contracts increased around 49%. The highest addition of open interest was at INR 5,900 call and INR 4,500 put strikes. Traders also added short bets in the futures chain and open interest in the February series increased 2.7% to 3.27 million. The contract ended 1.9% lower at INR 4,943.60. 

Though the government announced major changes in income tax in an attempt to boost consumption, which led to aggressive purchases of FMCG and consumer goods stocks, they started to fall after the US announced its first round of tariffs on some key trade partners and said Europe was next in line. After US President Donald Trump imposed tariffs on Canada, Mexico, and China, these countries retaliated. It paused the levies on Canada and Mexico, but retained the levies on China. While India was not a part of this list, there are worries that the country will get added soon, in which case the market is expected to fall. 

This also raises the possibility of volatility in commodity prices and poses challenges to FMCG companies which are heavily dependent on agriculture. Weak urban demand and only a gradual recovery in rural demand is adding to the worries. The management of its industry peer Nestle India also sounded cautious during its post-earnings call with analysts and highlighted that high inflation and slowdown in consumption are some of its major concerns. 

--Nifty 50 Feb closed at 23757.00, down 28.40 points; 60.70-point premium to spot index
--Nifty 50 Mar closed at 23898.00, down 25.45 points; 201.70-point premium to spot index
--Nifty 50 Apr closed at 24041.00, down 23.40 points; 344.70-point premium to spot index

State Bank of India, HDFC Bank, Titan Co., Bajaj Finance, Asian Paints, Trent, Reliance Industries, Zydus Lifesciences, ICICI Bank, Tata Motors, Infosys, BSE, Page Industries, Axis Bank, Kalyan Jewellers India, and ITC and were the most actively traded underlying stocks.  End

Edited by Akul Nishant Akhoury

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