INDIA – Britannia Industries, the popular biscuit maker known for brands like Marie Gold and Bourbon, is set to release its earnings report for the first quarter that ended June on August 2, 2024.
The company is expected to see higher volume growth compared to its peers due to strategic price cuts and increased grammage across its product portfolio.
According to a Moneycontrol poll of ten brokerages, Britannia Industries is likely to report a 4% revenue growth at Rs 4,178 crore(US$498.8M). Net profit is expected at Rs 517 crore(US$61.7M), up from Rs 458 crore(US$54.6M) in the corresponding quarter last year.
“Price actions in select SKUs are likely to arrest competition and aid the company in gaining market share. As the company has affected price actions, we see a 45 bps YoY gross margin contraction to 41.5 percent,” said Emkay Global.
The biscuit maker’s volume growth is forecasted to be around 7%, slightly better than the previous quarter, as the company remains competitive in the industry. However, the price cuts will restrict overall sales growth.
Gross margins are expected to contract by approximately 65 basis points, as the impact of price cuts and higher grammage offsets the effect of soft raw material prices, excluding wheat, which saw a slight sequential increase.
During the quarterly results, analysts will closely monitor demand trends in metro areas, rural settings, and tier-3 towns.
They will also pay attention to raw material prices and their impact on EBITDA margins, as well as the growing competitive pressure from unorganized players.
Amid the harsh summer, out-of-home consumption has been impacted, which could lead to a volume impact for Britannia.
However, the company’s strategic price cuts are expected to buoy volumes and help it gain market share.
Britannia Industries has been executing its volume growth guidance, which remains crucial for the company’s performance.
The biscuit maker has raised its grammage across popular packs to remain competitive and drive volume growth.
The resumption of focus on the Rs 5 SKU (stock-keeping unit) to drive demand in the tier-3 and rural segments is likely to help Britannia register better volume growth. However, rural demand still remains a laggard compared to urban areas.
As input prices have turned benign, increased competition from unorganized players will keep realisations under check while also impacting demand from the rural segment.
Britannia Industries’ share price has gained around 6% over the past six months, underperforming the frontline Nifty 50 index, which has jumped around 19% during the same period.
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