Britannia cracking volumes but margin may be soggy
MUMBAI : A key striking feature of Britannia Industries Ltd’s June quarter results is its high single-digit volume growth, estimated at 8% year-on-year, a multi-quarter high. However, pricing was weak, so revenue growth has lagged volume growth yet again. Britannia’s consolidated operating revenue increased by 4% year-on-year in the three months ended 30 June (Q1FY25) to ₹4,130 crore as pricing declined.
Other operating revenue surged as much as 195% to ₹120 crore, mainly owing to the incentive received from the company’s Ranjangaon plant, which has now qualified as an ultra-mega plant. Thus, total operating revenue growth was 6% in Q1. Britannia said its biscuit market share is rebounding after the challenges seen in FY24.
This is driven by distribution expansion, consistent brand investments and appropriate pricing actions. Plus, the rural markets are looking a shade better, with their share growing at a faster clip than urban markets. As such, Britannia has a higher share in urban than in rural.
In Q1, the company’s adjacent businesses, such as cakes, rusks and bread performed well. Cakes clocked sequential volume growth and rusks recorded a healthy double-digit volume growth despite a harsh summer. The company introduced the Pure Magic Stars and Golmaal variants in the March quarter.
Driving efficiencies and distribution, Britannia’s direct reach is now at 2.82 million outlets. Its rural distributor reach stands at 30,000. Coming to profitability, a relatively slower pace of annual increase in total raw material costs meant gross profit margin rose 147 basis points (bps) year-on-year to 43.4%.
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