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Informist, Monday, May 12, 2025

 

Please click here to read all liners published on this story

--Britannia: Happy to look at inorganic growth, but conscious of returns
--Britannia: Quick commerce made up 4% of sales, may rise to 8% in 3 yrs
--Britannia: Have exciting products lined up for launch this year
--Britannia: Endeavour to return to double-digit volume growth
--Britannia: Don't see deflation in wheat prices on high MSP
--Britannia: Comfortable with current operating margin levels
--Britannia: Hardly any change in market share in Jan-Mar
--Britannia: Reasonably optimistic on recovery, may be a gradual one
--Britannia: Focus to remain on sustaining margins
--Britannia: Closely monitoring commodity pricing, inflation picture hazy
--Britannia: Palm oil inflation 54% on year, flour inflation 12%
--Britannia: Number of rural distributors up at 31,000 vs 30,000 yr ago
--CONTEXT: Comments by Britannia's mgmt in post-earnings analyst concall
--Britannia: Number of outlets at 2.87 mln as on Mar. 31, vs 2.79 mln yr ago

 

By Sunil Raghu and Akash Mandal

 

AHMEDABAD/MUMBAI - Britannia Industries Ltd. does not see the need to increase prices in the coming months to stave off the impact of rising input costs, which have spiralled for the past few quarters and forced the bakery major to hike prices late in FY25, Vice-Chairman and Managing Director Varun Berry said in a post-earnings call with analysts on Monday.

 

He said that while the company was closely monitoring commodity pricing, the picture on inflation was still not clear. For Britannia, wheat and oil accounted for nearly 30?ch of the raw materials consumed in FY25, with sugar making up another 20%. Wheat flour prices saw an on-year jump of 12% and on-quarter jump of 9% in Jan-Mar, while palm oil costs were up 54% on year and 7% sequentially. Sugar, on the other hand, cost 1% lower for Britannia, both on year and sequentially.

 

For many quarters, Britannia has been focusing on increasing its market share, while sustaining profits. Berry, speaking to analysts post the Oct-Dec earnings, had said Britannia would increase prices 2.5% in Jan-Mar and another 1.5% in Apr-Jun. Britannia had hiked prices by 2% in Oct-Dec. On a cumulative basis, the effective price increase by Britannia from July 2024 to June 2025 was 6%.

 

"We do not see need to increase prices in the immediate future as most fast moving consumer goods companies took price hike pretty late in FY25," Berry told analysts on Monday.

 

On Friday, Britannia Industries announced its earnings for the March quarter, beating Street estimates. The company reported an eight-quarter high revenue growth. Price increases, primarily led the consolidated revenue to increase nearly 9% on year to INR 44 billion, marginally higher than the Street's estimates. The consolidated net profit increased 4% on year to nearly INR 6 billion, again marginally ahead of expectations. 

 

The top official said that while he was "reasonably optimistic" about growth going forward, he expected it to be more gradual rather than a "hockey stick" format. He also reiterated that Britannia was comfortable with current operating margins and would continue to focus on sustaining them. Britannia saw a 9% rise in its revenue and a 2% on-year increase in its operating profit growth in FY25. On a consolidated basis, the company's profit from operations in percentage terms was 16.4% in FY25.

 

During the last financial year, the company increased the number of rural distributors to 31,000 from 30,000 a year ago and the number of its outlets rose to 2.87 million from 2.79 million in Mar. 31, 2024. The share of quick commerce for Britannia stood at 4%. While the segment has been witnessing growth, it has remain "reasonably" small in overall contribution for Britannia. "It is growing because there is a three-cornered fight between the three big players in that space. And I think certain categories, it's even become 30% and 35%. But in our case, I see this move from, let's say, 4% to 8% in the next three years, but not beyond that," Berry said. However, this increase, combined with price hikes, has seen the company's market share remain unchanged.

 

Berry said the company was looking to achieve double-digit volume growth and had lined up some "very exciting" products for launch over the coming two to three months. He did not share the specifics of these products, but said this would see premium trades rising "as we go forward".

 

On why Britannia was not aggressive or not an active participant in the market to buy companies, Berry said that while it was "happy" to look at inorganic growth, it was conscious of the returns from such buys available. "It's just that we are very conscious of returns, right? Whatever we invest in, we would like to see returns. And whenever we've seen any of these big, you know, transactions that have happened, we have evaluated them, but we haven't been able to figure out how we'll get returns on these transactions," Berry told analysts.

 

For the financial year ended March, Britannia's consolidated net profit increased 2% on year to nearly INR 22 billion, and consolidated sales rose 7% on year to over INR 179 billion. At 1148 IST, shares of Britannia were at INR 5,507 per share on the National Stock Exchange, up 1.3%.  End
 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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