Jefferies in its report maintained a 'Hold' rating on Britannia with a price target of Rs 2,950 per share as the FMCG giant continues to build new categories with subdued margin trajectory. Also, the company's risk-reward ratio remains unattractive at 48x FY21PE.

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According to Jefferies, the company's Q2FY20 standalone net sales rose 7.1 percent YoY driven by 3 percent volume growth while consolidated net sales grew 6.2 percent YoY indicating no further slowdown.

The brokerage also added, "Strategic wheat inventory (management had highlighted building up wheat inventory in Q1FY20 in anticipation of cost increases going ahead) would have helped gross margins despite inflation in milk."

In the case of the company's financial accounts, H1FY20 debt saw an increase of ~Rs. 12 billion, which was partly on account of short term debt of Rs 5 billion for wheat sourcing, as a result of which inventories also went up by Rs 5 billion. Loans receivables fell from Rs 12 billion to Rs 9 billion while non-current investments went up by an equivalent ~ Rs 3 billion. Capex in H1FY20 stood at Rs. 1.8 billion, similar to H1FY19 levels, the report added.

The brokerage maintained its rating on Britannia given limited pricing power, slowing pace of market share gains and rich valuations at 48X FY21 PE.