Britannia Industries Limited — Q4 FY25 earnings call

Call held 12 May 2025

Management summary

Britannia closed FY25 with Q4 being the strongest quarter at 9% revenue growth after two tepid years (4% and 6%). The year was marked by severe commodity inflation (palm oil +54%, cocoa +83%, wheat +12%) which necessitated significant price increases. Despite this, cost savings program delivered 9x of FY14 base (2.5% of revenue), helping maintain operating margins at 16.4%. The adjacency portfolio (25% of revenue) showed strong momentum - croissant near Rs 200 crores, milkshakes past Rs 200 crores, wafers crossing Rs 100 crores. Cheese business was relaunched with channel-uniform pricing. Management is cautiously optimistic on demand recovery and targeting return to double-digit growth.

Highlights

  • Q4 revenue grew 9% YoY to Rs 4,376 crores - 7-quarter high growth

  • FY25 revenue Rs 17,535 crores, up 6% YoY; 10% on 2-year basis

  • FY25 PAT grew 3% YoY; 12% on 2-year basis; PAT margin 12.4%

  • Operating profit margin 16.4% for FY25, 16.6% for Q4

  • Cost savings program achieved 9x of FY14 base - 2.5% of revenue

  • Adjacency portfolio at 25% of revenue (biscuits 75%)

  • Direct reach expanded to 28.7 lakh outlets; total reach ~6.5 million

  • Severe commodity inflation: palm oil +54% YoY, cocoa +83% YoY, milk +21% YoY

  • CEO succession planning in progress - clarity expected in 3-4 months

Concerns

  • Severe commodity inflation persisting

Key financials

3 periods

Headline

  • Cost Savings (% of revenue)
    2.5%
  • Direct Reach
    28.7 lakh outlets
  • Total Reach
    6.5 million outlets
  • Other Operating Income
    ₹400 Cr

Q4

  • Revenue
    ₹4,376 Cr
    YoY +9%
  • Operating Profit Margin
    16.6%
  • PBT Margin
    16.7%
  • PAT Growth
    4%
  • Volume-Revenue Delta
    5.5%

FY25

  • Revenue
    ₹17,535 Cr
    YoY +6%
  • PAT Margin
    12.4%
  • Operating Profit Margin
    16.4%
  • PAT Growth
    3%

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

Cost Savings

  • Cost savings as % of revenue Cost Savings · FY26 · High confidence Over 2.5%
    In '25-'26, it's -- we are planning something over 2.5% of the top line.

    — N. Venkataraman

Portfolio Mix

  • Adjacency growth vs biscuits Portfolio Mix · Next 5 years · Medium confidence 1:1.5 ratio
    I would say 1:1.5 -- So if biscuits grows at...

    — Varun Berry

E-commerce

  • E-com/Q-com contribution E-commerce · Next 3 years · Medium confidence 4% to 8%
    I see this move from, let's say, 4% to 8% in the next 3 years, but not beyond that.

    — Varun Berry

CEO Succession

  • New CEO appointment CEO Succession · Next 3-4 months · High confidence Clarity expected
    The succession planning is in play, and it will definitely be clear to you in the next 3, 4 months.

    — Varun Berry

Market context

  • Revenue growth target Revenue Growth · FY26 onwards · Medium confidence Double-digit
    Our endeavor always will be to get back to double digits... the hope is that we get back to double-digit growth with time.

    — Varun Berry

Risks & concerns

  • Severe commodity inflation persisting

    high

    Palm oil +54% YoY, cocoa +83% YoY, wheat +12% YoY, milk +21% YoY. Wheat not expected to deflate due to 7% higher MSP.

    Management price increases taken; closely monitoring; cost savings doubling down

  • Adjacency portfolio mix stagnant at 75-25

    medium

    Despite multi-year focus on total foods, biscuit:adjacency mix has remained at 75:25. Management guides adjacencies to grow 1.5x biscuits.

    Analyst targeting 1:1.5 growth ratio; not pursuing aggressive inorganic

  • CEO succession uncertainty

    medium

    Rajneet Bhatia departed; Varun Berry took interim CEO role. New CEO appointment expected within 3-4 months.

    Analyst process in play; clarity in 3-4 months

  • Regional/local player competition

    medium

    Industry margin expansion from 3-4% to teens attracting new entrants. D2C brands not yet a significant threat but need monitoring.

    Management created war chest; doing territory-specific analysis

  • Volume growth lagging revenue growth

    low

    Volume growth significantly trailing revenue growth due to price increases. May further widen if additional pricing needed.

    Analyst 5.5% delta expected to persist; pricing driven by inflation

Q&A highlights

5 direct
Demand recovery and Kumbh impact Direct
I'm reasonably optimistic on the recovery happening. I don't think it's going to happen -- It's not going to be a hockey stick. But I do think that there is gradual recovery.

Cautious optimism on FMCG recovery after 2 years of false starts; not calling a hockey stick recovery

Asked by Abneesh Roy, Nuvama

Total foods strategy and inorganic growth Direct
Croissant getting close to INR 200 crores, milkshakes crossed INR 200 crores, wafers getting to crossing INR 100 crores... We've evaluated them, but we haven't been able to figure out how we'll get returns.

Adjacencies gaining scale but 75-25 mix unchanged for years; management won't do M&A at current valuations - disciplined but may be missing opportunities

Asked by Percy Panthaki, IIFL / Jaykumar Doshi, Kotak

Cheese relaunch and channel pricing Direct
We've priced every channel at the same price... we are seeing a 40-plus percent growth in our traditional trade business.

Channel-uniform pricing strategy after being at 25-30% premium; GT showing strong early results but management not declaring victory yet

Asked by Abneesh Roy, Nuvama

Cost savings sustainability Direct
We have enough projects to take us through the next 10 years with the same kind of savings.

Bold claim on 10-year cost savings runway; disciplined process starting November each year with cross-functional teams

Asked by Tejash Shah, Avendus Spark

Raw material composition and wheat outlook Direct
Wheat and oil about 30% each, about 20% sugar... We don't expect a deflation in wheat prices.

First detailed RM composition disclosure; wheat unlikely to deflate due to MSP being 7% higher despite better crop

Asked by Kunal Vora, BNP Paribas / Arnab Mitra, Goldman Sachs

1 min read 4 chapters

Detailed narrative

FY25 Close: Navigating Inflation with Cost Discipline

FY25 was defined by severe commodity inflation (palm oil +54%, cocoa +83%, wheat +12%, milk +21%) forcing significant price increases. Revenue grew 6% to Rs 17,535 crores with Q4 at 9% being the 7-quarter high. PAT grew only 3% as cost pressures were partially offset by a record cost savings program (9x of FY14 base, 2.5% of revenue). Key savings came from Maharashtra ultra-mega project fiscal incentives, UP Greenfield approvals, value engineering, and buying efficiencies.

Adjacencies Scaling but Mix Unchanged

The adjacency portfolio remains at 25% of revenue despite years of focus. However, individual categories are gaining scale: Croissant near Rs 200 crores (3x biscuit growth), milkshakes past Rs 200 crores, wafers crossing Rs 100 crores. Cake, rusk, dairy, and bread are each ~$100M. Multiple relaunches in Q4 (cake with new recipe/packaging, cheese with uniform channel pricing, rusk with new pack design). Management targets 1:1.5 growth differential between biscuits and adjacencies.

Distribution and Channel Evolution

Direct reach at 28.7 lakh outlets (up from 27.9 lakh), total reach ~6.5 million out of 9 million outlet category universe. Route-to-market project driving depth at high-potential outlets and width in rural. E-commerce/q-commerce at 4% of sales growing 7.5x vs other channels. Q-commerce profitability in same ballpark as company average. Digital-first launches (Choco Frames/Harry Potter) proving the model. Management expects e-com to reach 8% in 3 years.

Capital Allocation and M&A Philosophy

Management expressed strong discipline on capital allocation. On inorganic opportunities, Varun Berry questioned whether recent FMCG acquisitions (Capital Foods, Plix) have delivered returns. Preference is to grow organically within existing categories. FY25 saw significant capex in TN, UP plants and Odisha capacity enhancement. State fiscal incentives (Ranjangaon ultra-mega through 2037-38) provide meaningful cost support.

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