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    Britannia Inds.

    BRITANNIANeutral
    Fast Moving Consumer Goods·6 Aug 2025
    Management Summary

    Britannia delivered near double-digit revenue growth in Q1 FY26 driven by pricing (~7-8%) and healthy transaction growth (12%). PAT growth of 3% was depressed by a Rs 52 crore SAR (stock appreciation rights) revaluation charge; underlying growth was ~13%. The company gained market share in 5 of 7 regions, with the Hindi belt a standout (2.7x growth). East India saw temporary share loss due to mega-distributor restructuring. Adjacencies (rusk, croissant at mid-20s growth, wafers at ~30%) continued strong momentum. Commodity environment stabilizing after 2 years of volatility, positioning for margin improvement in coming quarters.

    Highlights

    8

    • Revenue grew 9.8% YoY (near double-digit) to Rs 4,535 crores consolidated

    • PAT grew 3% YoY; adjusted for Rs 52 Cr SAR revaluation charge, underlying PAT growth ~13%

    • Market share gained in 5 of 7 regions; East India distribution restructuring caused temporary share loss

    • Transaction growth at 12% despite ~2% volume growth

    • Hindi belt delivering 2.7x growth vs other states with 65 bps market share gain

    • Premium product salience up 310 bps

    • Quick commerce now 75% of e-commerce channel; e-commerce at 4% of total business

    • Capex guidance of Rs 100 crores for FY26 - much lower than prior years

    What Changed1

    vs Q2 FY26

    Tone shiftBullish and confident, particularly on GST tailwind driving volume growth; pivot from margin focus to growth focus → Confident and optimistic; satisfied with near-double-digit growth trajectory; comfortable with competitive position
    Key financials

    Metrics

    14

    Periods

    2

    Headline

    13
    • Consolidated Revenue
      ₹4,535 Cr
      YoY+9.8%
    • Revenue Growth (12-month)
      9.8%
    • Revenue Growth (24-month)
      14.2%
    • PAT Growth
      3%
    • PAT Growth (24-month)
      14%

    FY26

    1
    • Capex Guidance
      ₹100 Cr

    Guidance & targets

    4
    CategoryTargetPriority
    Capex
    Capital expenditure
    Rs 100 crores
    		High
    Revenue Growth
    Volume-revenue gap
    6-8% delta between volume and revenue growth
    		High
    Margins
    EBITDA margin
    Sustain or improve vs FY25
    		High
    Distribution
    RTM project urban coverage
    70% of urban retail
    		High

    Risks & concerns

    5
    RiskSeverity

    SAR revaluation creating earnings volatility

    Rs 52 crore SAR charge in Q1 FY26 depressed PAT growth to 3% vs ~13% underlying. Stock price volatility amplifies this. — Management acknowledged

    medium

    East India distribution disruption from mega-distributor restructuring

    Distribution restructuring to mega-distributor model in East caused market share loss. Local players benefited from Britannia's execution gap. — Management acknowledged

    medium

    Regional/local player competition intensifying

    Industry margins moving from 3-4% to teens has attracted new entrants. Small regional players competing primarily on price. — Management acknowledged

    medium

    Cake business struggling with price point migration

    Cake only at single-digit growth. Price point migration from Rs 10 to Rs 15 caused volume/revenue losses. UPI-driven price point flexibility hypothesis not validated. — Management acknowledged

    low

    Geopolitical uncertainty impacting consumer sentiment

    Varun Berry cited Trump-era uncertainty when asked about demand trajectory for rest of FY26. — Management acknowledged

    low

    Q&A highlights

    5

    “ITC has been very, very rational. Actually, we have no complaints with any one of our competitors... There is nothing dirty happening anywhere.”

    Competitive environment remains rational among organized players; regional players are the real threat

    asked by Abneesh Roy, Nuvama Wealth

    2 min read5 chapters

    Detailed Narrative

    01

    Near Double-Digit Revenue Growth with Pricing-Led Mix

    Britannia delivered 9.8% YoY revenue growth to Rs 4,535 crores. However, this was heavily pricing-led (~7.5-8% pricing) with only ~2% volume growth. Transaction growth at 12% is the better metric for the Rs 5/10 price-pack business (60% of portfolio). The delta between volume and revenue is expected to persist for 2-3 more quarters. Hindi belt was the standout with 2.7x growth vs other regions and 65 bps market share gain.

    02

    SAR Charge Masking Strong Operating Performance

    A Rs 52 crore SAR (stock appreciation rights) revaluation charge depressed reported PAT growth to 3%. Underlying PAT growth excluding SAR was ~13%. The SAR charge is driven by stock price volatility and uses Black-Scholes modeling. Management committed to finding ways to smooth this out from FY27 onwards. With stable stock prices, there should be no further charges.

    03

    Adjacencies Driving Premiumization

    Croissant (mid-20s growth, breakeven, 35% from e-com), wafers (~30% growth), rusk (high double-digit, dramatically improved profitability) are the growth engines. Premium product salience up 310 bps. Bread expanding from North to national. Dairy GT up 40% after price competitiveness improved. Key innovation launches: Pure Magic Choco Tarts, NutriChoice 100% Millets, Milk Bikis Smart (chess/DHA themed).

    04

    Quick Commerce Emerging as Strategic Channel

    E-commerce at 4% of total business with 75% from quick commerce. Supplying 160 cities and 3,500 dark stores. Market share 500 bps higher in e-commerce than offline. Rs 5/10 packs less than 5% of e-com sales - naturally premium channel. Pure Magic Stars getting 50% of sales from q-com, Croissant 35%. In investment phase on profitability; driving premium mix to ensure positive unit economics.

    05

    RTM Distribution Project Scaling Up

    Route-to-market project targeting 70% urban retail coverage with bespoke service levels for high-potential outlets. One-third of scale-up completed in first 4 months. Showing high single-digit delta growth vs control universe. Even higher delta for adjacencies (Cake, Rusk, Croissant). Full scale-up expected in next 4-5 months. Focus on change management and ensuring distributor partners benefit.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.