Britannia Industries Limited — Q2 FY26 earnings call

Call held 7 Nov 2025

Management summary

Britannia reported a somewhat muted top-line quarter due to GST 2.0 implementation disruption in September, which cost ~2-2.5% revenue growth. However, profitability was strong with 23% PAT growth driven by lower employee costs (reduced ESOP provisioning) and controlled commodity environment. Management is very bullish on the GST rate cut benefiting organized players at the expense of non-compliant regional players, and expects to return to double-digit revenue growth. The company is pivoting from margin expansion to volume-led growth, potentially accepting slight margin haircuts to drive competitiveness.

Highlights

  • Revenue grew 4.1% YoY, impacted by GST rate rationalization disruption in September

  • Operating profit grew 23.1% YoY with OPM at 18.3%

  • GST reduced from 18% to 5% on 85% of portfolio effective Sep 22, 2025

  • Employee cost benefited from lower ESOP provision (Rs 5 Cr vs Rs 50 Cr last year)

  • New CEO Rakshit Hargave joining in December 2025

  • Adjacencies (croissant, rusk, wafers) delivering strong double-digit growth

  • Rural outpacing urban growth; East India distribution ~90% normalized

Key financials

  1. Net Sales Growth 4.1%
  2. Operating Profit Growth 23.1%
  3. Profit Before Tax Growth 24%
  4. Profit After Tax Growth 23%
  5. Operating Profit Margin 18.3%
  6. PBT Margin 18.6%
  7. PAT Margin 13.8%
  8. Pricing Growth in Q2 7.5%
  9. ESOP Provision Q2 FY26 ₹5 Cr
  10. ESOP Provision Q2 FY25 ₹50 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

Growth Strategy

  • Volume-led growth Growth Strategy · H2 FY26 onwards · High confidence Volume and revenue growth both positive
    Now, it's got to be about volume-led growth... our focus on competitiveness is going to be very-very clear.

    — Varun Berry

Margins

  • EBITDA Margin Margins · Near term · Medium confidence Potential slight haircut
    If we have to get aggressive top-line growth, then we might have to look at a slight haircut as far as margins are concerned.

    — Varun Berry

GST Normalization

  • Full portfolio grammage adjustment GST Normalization · Mid-November 2025 · High confidence 100% complete
    By the middle of November, we will have our entire portfolio with the required grammages and the pricing.

    — Varun Berry

Market context

  • Top-line growth Revenue Growth · Medium term · Medium confidence Double-digit
    I would certainly think that we should be looking at getting to double digits in due course, because there seems to be a very positive sentiment around consumer goods and especially foods.

    — Varun Berry

Risks & concerns

  • State fiscal incentives may reduce due to lower GST rates

    medium

    GST reduction from 18% to 5% may reduce state government incentives tied to GST refunds. Impact not yet quantified. Working on production optimization across factories to mitigate.

    Management engaging with state governments; 3 of 5 states positive; quantum unquantified

  • Margin compression from volume-led growth strategy

    medium

    Shift from margin expansion to volume/revenue growth may require regional pricing investments and increased brand spending.

    Management acknowledged willingness to accept slight margin haircut for growth

  • Dairy business underperforming expectations

    medium

    Cheese market growth slowed; modern trade competitive with heavy discounting. Ranjangaon plant not delivering expected results.

    Management working on efficiencies and channel expansion; acknowledges below-plan performance

  • East India distribution disruption

    low

    Distributor disruption in East India from previous quarter mostly resolved but not fully back to normal.

    Analyst 90% normalized; expects full recovery

  • National player aggression in modern trade

    low

    Some national competitors doubling down on modern trade with heavy discounts to compensate for regional sales losses.

    Management selective response; not matching all discounts

Q&A highlights

4 direct
GST impact and market share gains from regional players Direct
With the GST rates dropping to 5%, there would be a positive impact for national players... when it was 18%, the risk reward was in their favor. But now it's 5%, I don't think it's going to make that much of a difference.

GST rationalization is the biggest structural positive; management expects organized players to gain 15-18% addressable market from non-compliant small players

Asked by Abneesh Roy, Nuvama Capital

New CEO transition Direct
He is going to handle the entire business, and my job will be to help him wherever he needs any help. I will not be directly handling anything as he joins.

Clean CEO transition with Varun Berry stepping back fully; no portfolio split

Asked by Abneesh Roy, Nuvama Capital

Adjusted revenue growth and demand outlook Direct
This is our moment and it will definitely bring us the kind of growth that we have been missing for some time.

Management very bullish on demand recovery; adjusted Q2 growth was ~6-6.5%

Asked by Avi Mehta, Macquarie Capital

State government fiscal incentives at risk Partial
At least three out of the five state governments that we have reached out to, have said they will figure out some ways of securing it.

Potential margin risk from loss of state incentives linked to GST refunds; quantum not yet quantified

Asked by Percy Panthaki, IIFL Securities

Dairy/Cheese performance and protein drinks Direct
Performance in dairy is not as we would have expected... We are not looking at entering more categories. We are looking at consolidation.

Dairy remains a drag; management focused on consolidation not new categories; exploring protein RTD drinks

Asked by Kunal Vora, BNP Paribas

1 min read 4 chapters

Detailed narrative

GST 2.0 - Game Changer for Organized Players

The GST rate reduction from 18% to 5% on 85% of Britannia's portfolio (effective Sep 22, 2025) is the dominant theme. While it caused ~2-2.5% revenue loss in Q2 due to destocking, management sees this as transformational. The key insight: ~15-18% of the biscuit market is held by small non-compliant regional players who benefited from avoiding 18% GST. At 5%, the risk-reward of non-compliance diminishes sharply, creating a structural share shift toward organized players. Britannia responded with grammage increases on LUP (65% of portfolio at Rs 5-10) and price cuts on large packs. By mid-November 2025, 100% of portfolio was adjusted.

Strategic Pivot: From Margins to Volume Growth

With OPM at 18.3%, PBT margin at 18.6%, and PAT margin at 13.8%, management is satisfied with profitability levels and is now pivoting to volume-led growth. This includes: (1) Regional/state-level competitive pricing and variants, (2) Increased brand investments returning to normalized levels after 2 years of belt-tightening, (3) Selective modern trade competitive responses, and (4) Expansion in rural through direct distribution model replacing hub-and-spoke. Management explicitly acknowledged potential for slight margin haircut to drive growth.

Product & Innovation Pipeline

Pure Magic brand expansion (Choco Tarts, ChocoStars, Choco Frames with Harry Potter theme). NutriChoice 100% millet cookies (no maida, no palm oil, no added sugar). Tiger Doodh Glucose relaunch differentiating from competitor glucose biscuits. Chunkies range expansion. Digital-first and e-commerce exclusive premium launches. Exploring protein ready-to-drink beverages. Adjacencies (croissant, rusk, wafers) consistently delivering double-digit growth.

CEO Transition

Rakshit Hargave joins as new CEO in December 2025. Varun Berry (current EVCMD & CEO) will transition to a supporting role with no direct business responsibility. Clean handover with no portfolio split planned.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Fast Moving Consumer Goods earnings calls