Britannia Industries Limited — Q1 FY26 earnings call

Call held 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

  • 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

Key financials

2 periods

Headline

  • 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%
  • Profit from Operations Margin
    15%
  • PBT Margin
    15.5%
  • PAT Margin
    11.5%
  • SAR Revaluation Charge
    ₹52 Cr
  • Transaction Growth
    12%
  • Volume Growth
    2%
  • Pricing Growth
    7.5%
  • Premium Product Salience Increase
    310 bps

FY26

  • Capex Guidance
    ₹100 Cr

What they filed

Q1 FY27: revenue up 8.2%, net profit up 14.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue4,668 4,593 4,432 4,622 4,841 +4%4,970 +8%4,719 +6%5,000 +8%
EBITDA780 843 801 752 951 +22%977 +16%834 +4%838 +11%
Net profit532 582 559 520 655 +23%682 +17%680 +22%593 +14%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Capex

  • Capital expenditure Capex · FY26 · High confidence Rs 100 crores
    INR 100 crores is what it would be this year, which is much lower than what we've seen in the past few years.

    — Varun Berry

Revenue Growth

  • Volume-revenue gap Revenue Growth · Next 2-3 quarters · High confidence 6-8% delta between volume and revenue growth
    The delta between volume and revenue will remain at about 6%, 7%, 8% for the coming 2 or 3 quarters.

    — Varun Berry

Margins

  • EBITDA margin Margins · FY26 · High confidence Sustain or improve vs FY25
    We are in a good place to be able to take this forward in a stable and good way.

    — Varun Berry

Distribution

  • RTM project urban coverage Distribution · Next 4-5 months (by end of Q2/Q3 FY26) · High confidence 70% of urban retail
    The intent is to make sure that 70% of our urban retail is covered through this model... 1/3 of the entire scale-up has been done.

    — Vipin Kataria

Risks & concerns

  • SAR revaluation creating earnings volatility

    medium

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

    Management will try to even it out better from next year

  • East India distribution disruption from mega-distributor restructuring

    medium

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

    Management acknowledged turmoil; expects strong comeback

  • Regional/local player competition intensifying

    medium

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

    Management creating war chest; doing competitor-specific analysis; fighting battles in smaller territories

  • Cake business struggling with price point migration

    low

    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 reassessing rs 10 to rs 15 migration strategy

  • Geopolitical uncertainty impacting consumer sentiment

    low

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

    Management cautious on forward demand outlook

Q&A highlights

5 direct
Regional competition and ITC dynamics Direct
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

Volume growth disconnect and transaction growth Direct
The transaction growth has been 12%. So we are pretty happy with our transaction growth of 12%.

Volume growth at only 2% vs 10% revenue growth; transaction growth (12%) is better metric for price-pack dominated business

Asked by Mihir Shah, Nomura

Gross margin trajectory Direct
If the commodity prices are within a band, then obviously, the margins can only be better.

Price increases now fully cover inflation; palm oil duty cut benefit mainly in Q2; gross margins set to improve

Asked by Mihir Shah, Nomura

Quick commerce strategy and market share Direct
We have close to 500 points higher market share in e-commerce... the salience coming from Rs 5 and Rs 10 price points is less than 5%.

E-commerce/q-commerce channel is premium-mix oriented for Britannia; 500 bps higher share vs offline; not cannibalizing GT

Asked by Jay Doshi, Kotak Securities

Cake strategy misstep Direct
We tried to move price point from INR 10 to INR 15 and we sustained a certain volume and revenue losses when we did that.

Honest admission that price point migration in cake didn't work as expected; reassessing strategy

Asked by Nihal Jham, HSBC

2 min read 5 chapters

Detailed narrative

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.

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.

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).

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.

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.
View original transcript

More Fast Moving Consumer Goods earnings calls