Britannia Industries Q1 FY27 earnings call

Britannia Industries reported a consolidated revenue from operations of INR 4,964 crores for Q1 FY27, marking a 9.5% year-on-year growth. Profit After Tax (PAT) stood at 11.9% of revenue, with a 12-month growth of 13.6%. Operating profit, PBT, and PAT all grew ahead of sales, at 12.7%, 13.7%, and 13.6% respectively. The company achieved a volume growth of approximately 9% for the quarter, with a pricing growth of about 1%.

General Trade (GT) showed a demand buildup, growing at 1.5 times the rate of the previous year, indicating good momentum after past pressures. Other channels, including e-commerce and quick commerce, demonstrated even faster growth at nearly 2.5 times that of GT, with e-commerce showing strong double-digit growth. The resolution of dual pricing issues in rural and wholesale channels contributed to the strong exit growth in June, bringing back buyers and smaller retailers.

The company continues to focus on five strategic pillars: driving efficiencies in sales, distribution, and supply chain; elevating brand experience; innovation; developing adjacency businesses and future platforms (health); and sustainability. Several projects related to innovation and future platforms, particularly in health and wellness, are underway and expected to show output soon. Britannia is committed to expanding its portfolio beyond traditional bakery products, with an inorganic agenda also on the table.

Input costs remain a significant watch item. LPG and PNG prices, crucial for baking, shot up in April and May, remaining 1.5 times above February levels. Palm oil is at INR 140, a 20% increase, and sugar prices have risen by INR 7 per kilo in the last 2-3 weeks. The company is focusing on cost efficiency programs, packaging optimization, waste reduction, and exploring alternate fuels to mitigate these pressures, while also monitoring potential impacts from El Nino on flour prices.

Britannia has increased its ad spends, strategically investing in brand building ahead of sales growth. This has resulted in an uptick in brand tracking health parameters, including recall. The company is seeing market share gains across a large number of biscuit categories on a sequential basis, driven by focused interventions and sharpened sales team efforts. Examples include the Marie Gold campaign and NutriChoice platform building.

The international business experienced a mixed performance, with pressures in the Middle East and challenges in markets like Saudi Arabia, but strong performance in Africa, particularly Kenya. Management expects the international business to return to a growth track. On ESG, Britannia reached 3.97 lakh contact points for its nutrition program and increased renewable electricity usage in plants by 16%, with some factories having over 90% women in the workforce.