BRITANNIANSEQ1 FY 2025-26August 06, 2025

Britannia Industries Limited

8,490words

97turns

11analyst exchanges

7executives

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Management on call

Varun Berry

EXECUTIVE VICE CHAIRMAN, MANAGING DIRECTOR AND CHIEF EXECUTIVE

N. Venkataraman

EXECUTIVE DIRECTOR AND

Vipin Kataria

CHIEF COMMERCIAL OFFICER,

Manoj Balgi

CHIEF MANUFACTURING AND

Siddharth Gupta

GENERAL MANAGER,

Ramamurthy Jayaraman

GENERAL

Ayush Agarwal

INVESTOR RELATIONS -- BRITANNIA INDUSTRIES LIMITED

Key numbers — 40 extracted

20 basis point

verview, we've had pretty good revenue growth. I can say that it's double digits. It's just about 20 basis points lower than double digits. So we've a 9.8% 12- month growth and a 14.2% 24-month growth. Our profi

9.8%

say that it's double digits. It's just about 20 basis points lower than double digits. So we've a 9.8% 12- month growth and a 14.2% 24-month growth. Our profit after tax is a 3% growth for 12 months

14.2%

. It's just about 20 basis points lower than double digits. So we've a 9.8% 12- month growth and a 14.2% 24-month growth. Our profit after tax is a 3% growth for 12 months and 14% for 24 months. Getti

le digits. So we've a 9.8% 12- month growth and a 14.2% 24-month growth. Our profit after tax is a 3% growth for 12 months and 14% for 24 months. Getting to the next slide, which is the commodities

14%

month growth and a 14.2% 24-month growth. Our profit after tax is a 3% growth for 12 months and 14% for 24 months. Getting to the next slide, which is the commodities. As far as our market share is

rs,

ncerned, sorry, the market share slide, we've improved our market share versus our organized players, 5 out of 7 regions we've gained share. There are 2 regions where there's some work to be done. A

lent. Flour, there's been versus Q1 of '25, which is the corresponding quarter last year, it's an 8% inflation. Palm oil, while versus -- sequentially, it's been negative. So we've had a deflation

45%

ve had a deflation sequentially, but versus the same quarter last year, we've had an inflation of 45%. Sugar, again, within those boundaries, so pretty manageable. Cocoa

35%

in those boundaries, so pretty manageable. Cocoa also sequentially has come down, while there's a 35% inflation versus last year. Laminates and CBBs both have been within those guardrails and pretty

been doing really well for us. We've been gaining share in that segment, although it's still only 4% of our overall business. Moving on to the next slide, which is driving the Hindi belt. Hindi be

2.7x

All 4 states have given us very good growths, very high double-digit growths, and the growths are 2.7x what they are for our other states. So this -- and this has led to a market share gain of 65 basi

65 basis point

re 2.7x what they are for our other states. So this -- and this has led to a market share gain of 65 basis points over Q1 in the Hindi states. So that agenda is going quite well for us. On the marketing progr

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Guidance — 20 items

Varun Berry

opening

“The high potential outlets are being focused on through our RTM project, and this is not just for the base business, but it's got excess focus on the adjacency business, and we are seeing that pay up for us.”

Manoj Balgi

opening

“In terms of specific water consumption reduction, we are ahead of the target and we have had about 3.5% reduction this quarter.”

Varun Berry

opening

“The outlook, obviously, driving consumption in the core categories remains our big agenda and closely monitoring policy interventions and the harvest output, which impact the commodity prices also will be a very critical thing for us.”

Mihir Shah

“Can one expect this gross margins to have bottomed out and to see an improvement and all the high-priced inventory have gotten exhausted?”

Nitin

“And how should we build this going forward in the coming quarters?”

Varun Berry

“And in the next year -- not in this year, but in the next year, we'll try and see how we can even it out better.”

Vipin Kataria

“So therefore, a lot of the innovations we've been able to build through the entire digital commerce, and that's the strategy going forward.”

Latika Chopra

“Do you anticipate further acceleration in overall revenue growth through rest of the year?”

Latika Chopra

“And in that light, do you expect EBITDA margins for full year to still hover around last year levels or improve from there?”

Varun Berry

“So in the last year's results, the other operating income was higher because in Ranjangaon, we had made the investments which were necessary to take us to an ultra-mega project from a mega project, which gave us a windfall in the Q1 of 2025.”

Risks & concerns — 11 flagged

But having said that, I think from here on, we do not see the kind of wide fluctuations that we've seen on commodity and we always perform much better in stable conditions during the turbulence in commodity prices, like what we have seen in the last 2 years, it's always difficult to navigate price increases and estimate what it's going to lead to, et cetera, et cetera, et cetera.

— Varun Berry

We've also had the SAR revaluation, which happens, which is an impact of INR 52 crores to our overall profit.

— Varun Berry

And the momentum versus what we saw in the fourth quarter seems to have gone down, while most of the other consumer companies are seeing an improvement in momentum when it comes to volume growth from 4Q to 1Q Is there any impact of this East distribution rejig that you're doing is impacting this volume growth?

— Mihir Shah

I just wanted to check on this SAR sort of impact of INR 52 crores.

— Nitin

So it's very difficult to judge where the consumer sentiment is headed.

— Varun Berry

Or do you see any significant risk on EBITDA margins?

— Latika Chopra

Ramamurthy Jayaraman: Percy, it's a little bit difficult to say because with the duty cut, it also depends on the international prices, how they move, etcetera.

— Percy Panthaki

So just to put a quantification will be a little bit difficult on the number per se.

— Percy Panthaki

Do you expect any kind of this benefit to be passed on to the consumers or more likely to maintain current price levels because anyways, margins were under pressure?

— Percy Panthaki

Can I just get a broader sense, say, there's a 10% increase in, say, stock price in a given time frame, say, a quarter or 2 how one should think about the P&L impact of that?

— Amit Sachdeva

How one should think about structurally taking into account without having to worry about each quarter, the one- off impact of it and how margins should we look at it?

— Amit Sachdeva

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Q&A — 11 exchanges

Congrats on near double-digit sales growth. My first question is on the market share and overall local player dynamics. So yes, specific question is number 3 player, ITC has called out in their Q1 release that biscuits has been one of the key drivers for their growth. Now 5, 6 years, of course, the number 3 player has been quite rational. Is there any resurgence of the number 3 player? And on your comment on local players coming back. Why in only 2 regions you faced a market share issue, why was it restricted to 2, why not in all the 7 regions? And could you clarify which are those players and

Varun Berry

Yes. So let me answer your second part first. So the region that we've had a little bit of turmoil is the East, and the reason for that is not the regional players, but it's an internal restructuring of distribution that we are doing. We are looking at mega distributors, we are trying to create infrastructure for the future. And as a result of that, there's been some amount of turmoil, and that is one region where we've lost share. And that is one region where also you tend to have a lot of local players. So I guess the local players have benefited on -- basically our stumbling a bit in the ex

So firstly, on the volume growth, it seems to be just about 2% volume growth. And the momentum versus what we saw in the fourth quarter seems to have gone down, while most of the other consumer companies are seeing an improvement in momentum when it comes to volume growth from 4Q to 1Q Is there any impact of this East distribution rejig that you're doing is impacting this volume growth? That's one. And the other one is, do you see any green shoots or trend change for volume growth trajectory to get better in the coming quarters?

Varun Berry

No. See, the point is that with the kind of inflation that we've seen, there is bound to be revenue growth more than volume growth in these times.

Yes. So there is bound to be -- volume will give way for revenue, and that's what we are seeing. However, the way to look at it in our business, because 60% of our business comes out of price packs, which are INR 5 and INR 10. The way to look at it is to see what kind of transaction growth, how many consumers are interacting with our brands. And the transaction growth has been 12%. So we are pretty happy with our transaction growth of 12%. And volume will also come back slowly and steadily. But I would say the delta between volume and revenue will remain at about 6%, 7%, 8% for the coming 2 or

Mihir Shah

Understood. Sir, second question is on the commodities. Sequentially, most commodity prices are seeing a downward trend and there seems to be kind of a 7.5%, 8% pricing in the system. How should one think about the gross margin from here on? Because in 1Q, we did not see much improvement on a sequential basis versus what you're expecting, but maybe there were some higher inventory in the system. Can one expect this gross margins to have bottomed out and to see an improvement and all the high-priced inventory have gotten exhausted? No, it was not about high-priced inventory. In Q1, the inflatio

I just wanted to check on this SAR sort of impact of INR 52 crores. So how exactly is the calculation? And how should we build this going forward in the coming quarters?

Varun Berry

See, it's completely dependent on the stock price, where the employees get the SAR, which then gets revalued basis the stock price. So -- but we do understand the fluctuation it causes. And in the next year -- not in this year, but in the next year, we'll try and see how we can even it out better. Okay, sure. And my second question is around how are we investing behind brands? Because last year, A&P spendings have reduced 19%. So can you throw some light here? And also, if you can help me understand how is our digital spend? So we did rationalize our A&P spends during this quarter. What we did

My first question was checking your confidence on demand recovery. You talked about a marginal uptick in urban and rural demand trends. You have delivered close to 10% revenue growth in this quarter. Much of the pricing is behind us, and you would assume that incremental growth is going to be transaction led, as you mentioned. Do you anticipate further acceleration in overall revenue growth through rest of the year?

Varun Berry

Latika, we are going through turbulent times really with Mr. Trump and all that’s happening on the international front. So it's very difficult to judge where the consumer sentiment is headed. But yes, we've seen very good growth this quarter. And hopefully, we'll be able to continue with that momentum as we go forward as well. Okay. The second thing I wanted to touch upon was a little better in detail was around your comments on market shares and regional competition. You just alluded that gross margins probably will improve sequentially. But do you see a need for higher competitive spends to

Sir, so basically, just -- I know this has been discussed, but again on the gross margin front. Just wanted to understand as to when this palm oil cost reduction and duty reduction, which quarter is it going to hit us? Did it hit us partially this quarter or it's going to be Q2 or Q3?

Manoj Balgi

So the reduction was given by the government somewhere in May. And part of the benefit has already come in Q1, but largely, it will come in Q2. Okay. Because you would have some holding period also of inventory. That's why I'm asking. No, no, we don't have a holding period. Whatever we buy, what it -- the duty which exists today is applied. So there's no stock, which hits us in adversely or favorably as far as duties are concerned. And how relevant or how big is this duty cut plus whatever cut has happened in the base price itself? I mean, in terms of gross margin basis points, is it like 50 b

Sir, across industry, we are seeing strong traction in health, nutrition, wellness-led launches, especially on D2C and quick commerce. And interestingly, on the previous answer, you also called out that quick commerce and modern trade is an opportunity, which is under-indexed. So do you see any portfolio gaps or opportunities for us in this space? And especially like, let's say, something like SuperYou, if you saw, those brands are getting immediate traction on wellness platform and in quick commerce channels. So just wanted to understand your perspective on this.

Siddharth Gupta

Okay. So I'll answer that, Siddharth here. So the way we look at it is we keep a check on trends, which are developing. And you're right, health is one trend, which is becoming salient especially on quick commerce. Similarly, indulgence is again, a similar trend that we are seeing. And to cater to these trends, if you recall, I mean even in the presentation, there was an innovation launch that we spoke of, which is NutriChoice 100% millets, which is actually catering to this trend of healthier offerings, which the quick commerce consumer is seeking. And similarly, the Pure Magic Choco Tarts th

Yes. Sir, 2 questions. First is on the regional competition you did mention at the start of your presentation. So is it -- generally, we've seen that the competition comes up when there is a massive price reduction that happens on the RM side. Maybe at this point in time, there is some moderation, but not as much. So is it that the color of regional competition has changed where rather than just being price- driven, even in terms of innovation of products, they are sort of matching up and now this is not just becoming an RM-driven regional competition, but more serious as we consider ahead?

Varun Berry

See what's happened over the years, if you look at what's happened to the biscuit industry about 14 years back, the margins in the industry were about 3%, 4%, right. From that, it's moved to teens now, So whenever -- and the Indian entrepreneur, you know, whenever the site potential of making margins, they will be there to make sure that they enter the market. And we've seen some entries happen like that. And when people come in, they do get some fruit for whatever they have done. So it's always important to make sure that we understand where and what their strengths are and make sure that we

Just a small clarification on the SAR valuation again. Although it's good that the interests are aligned and employees -- I assume that's linked with economic value created and that reflects in the stock being -- ESOP being revalued. Can I just get a broader sense, say, there's a 10% increase in, say, stock price in a given time frame, say, a quarter or 2 how one should think about the P&L impact of that? Is it that I assume it's a structural company and it grows earnings every year. How one should think about structurally taking into account without having to worry about each quarter, the one

Varun Berry

So it's very simple. See, in a normal market, it goes up whatever the stock price goes up by. It's just been that overall, the times have been very turbulent. The stock price had gone down and then it came up, and in those turbulent times, you will see these bumps in the road. So I think as things become smoother, I think it will be -- see, if you look at the range in 1 year, as far as our stock price is concerned, it's a very wide range, and that's what's created this number. So with a smoother road, I think this kind of bump doesn't happen. Got it. Got it. That's very helpful. It's just that

I just have a small sort of a follow-up on the previous question itself. So if we assume that the stock remains at these levels for the next 2, 3 quarters, then is this INR 52 crores charge is the all we'll see for the full year? So should we think of it that your underlying employee costs without SAR's charge, was about INR 190 crores this quarter. So that will continue ballpark at that run rate for the next 3 quarters and this INR 52 crores is basically something you see at a full year level. Is that right understanding?

Varun Berry

Yes. If the stock price remains stable, there will be no charge as far as SAR is concerned. And if it moves up 10%, it will be INR 5 crores more, right? Yes, it will be small. Understood. Okay. That's very helpful. Second is, Varun, could you please share... Ramamurthy Jayaraman: Jay, on your previous question that you asked, the difference will be a 10% of INR 50 crores may not be a right assumption because these are all basis the model that is used. So we use the Black-Scholes model, this is a predictive model of what the prices are going to be basis the past movements. So it's a predictive

Thank you, everyone, for spending time with us on the call today. We look forward to interacting with you again in the future. Thank you, and have a good day.

Varun Berry

Thank you.

Speaking time

Varun Berry

Moderator

Percy Panthaki

Vipin Kataria

Latika Chopra

Tejash Shah

Manoj Balgi

Abneesh Roy

Nitin

Jay Doshi

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Opening remarks

Ayush Agarwal

Thank you, Neerav. Good morning, everyone. This is Ayush from the Investor Relations team. I welcome you all to the Britannia Earnings Call to discuss the financial results of Q1 '25-'26. Joining us today on this earnings call is our Executive Vice Chairman, Managing Director and CEO, Mr. Varun Berry; Executive Director and CFO, Mr. N. Venkataraman; Chief Commercial Officer - Sales and Replenishment, Mr. Vipin Kataria; Chief Manufacturing and Procurement Officer, Mr. Manoj Balgi; General Manager - Marketing, Mr. Siddharth Gupta; and General Manager - Corporate Finance, Mr. Ramamurthy Jayaraman. The analyst deck is uploaded on our website. Before I pass it on to Mr. Varun Berry, I would like to draw your attention to the safe harbor statement in the presentation. Over to Mr. Berry with the remarks on performance.

Varun Berry

Good morning, everyone, and welcome to the call. So let me just jump into the presentation straightaway. So getting on to our agenda, I quickly take you through the business overview, move on to the strategic priorities, the cost and profitability outlook and finally, the financial results. So the first slide of the business overview, we've had pretty good revenue growth. I can say that it's double digits. It's just about 20 basis points lower than double digits. So we've a 9.8% 12- month growth and a 14.2% 24-month growth. Our profit after tax is a 3% growth for 12 months and 14% for 24 months. Getting to the next slide, which is the commodities. As far as our market share is concerned, sorry, the market share slide, we've improved our market share versus our organized players, 5 out of 7 regions we've gained share. There are 2 regions where there's some work to be done. And overall, while market share has remained flattish from a Nielsen perspective, I think other players in the indu

Manoj Balgi

So the progress on the ESG KPIs we track has been good this quarter. We have moved 4% in terms of our renewable electricity consumption. In terms of specific water consumption reduction, we are ahead of the target and we have had about 3.5% reduction this quarter. The diversity agenda is being driven, where we have had in the woman factory workforce, we have had about a 1.8% increase over the previous quarter. And through our CSR arm, the Britannia Nutrition Foundation, the number of beneficiaries that...

Manoj Balgi

Yes, yes. And Britannia Nutrition Foundation, the number of beneficiaries reached has increased by about 3.5% over the previous quarter. And we have got multiple recognitions this quarter about -- we were recognized with multiple accolades for the global CSR and ESG awards for 2025. Six of our factories won the CII EHS Excellence Awards. And Dun & Bradstreet has recognized us as one of the leading ESG entities in India.

Varun Berry

And Manoj has been leading this right from the time we started, and I'm very proud of achievements here. Obviously, a mountain to climb, but a very good start as far as ESG is concerned. Now moving on to cost and profitability. So on the cost front, sustaining margins while being competitive was our agenda, and I think we've been able to do that quite well. We've been able to fight the regional players as well, and we've been able to make sure that we keep the momentum going. Also, investing behind key brands and scaling up innovations, we've been able to do that quite well, and we are in the process of launching a lot more innovations during this year. The outlook, obviously, driving consumption in the core categories remains our big agenda and closely monitoring policy interventions and the harvest output, which impact the commodity prices also will be a very critical thing for us. But having said that, I think from here on, we do not see the kind of wide fluctuations that we've seen

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