Britannia Q3 Results Preview: PAT may fall YoY on muted revenue, profitability; demand outlook eyed


It’s likely to have been another soft quarter for Britannia Industries as the company is expected to see muted growth in earnings amid weak volumes and rural demand, higher raw material costs, and likely price cuts in some categories.

The company is seen reporting a moderate 1.2% year-on-year (YoY) growth in consolidated revenue for the December quarter due to flat growth in volumes, according to the average of estimates given by 10 brokerage firms.

Earnings before interest, taxes, depreciation and amortization or EBITDA is likely to drop by 0.1% YoY to Rs 817 crore, and consequently, the net profit is seen falling by 0.4% to Rs 555 crore, the estimates showed.

The bread-to-biscuit maker is scheduled to release its quarterly numbers on Tuesday.

Here is a summary of who expects what from the confectionary maker:

Kotak Institutional Equities

We model a 1% YoY growth in biscuit volumes (flat YoY in 1Q/2Q) and 0.7% YoY price-mix impact after factoring in anniversarization of price increases, some price reduction through grammage increases (price reversal of 1.5-2.0% in H1 FY24), and intensified local competition, resulting in 2% YoY growth in standalone revenue (similar to 1.8% YoY revenue growth in Q2).

Consolidated revenue is expected to be up 1% YoY, partly dragged by the shift of subsidiary revenues to JV. We expect consolidated gross margin to improve 20 bps sequentially to 43.1% due to stable raw material trends.

We estimate EBITDA margin to decline by 90/70 bps QoQ/YoY off a high base. Lower employee costs boosted the EBITDA margin in 2Q FY24 and 3Q FY23 EBITDA margin was aided by wheat forward covers and a benefit of about 40-50 bps pertaining to the prior period’s PLI incentives.

Equirus Capital

Britannia would witness another quarter of soft topline growth as it laps a high base (+17% YoY growth in 3Q FY23), price cuts/grammage increases and pricing anniverserization.

New launches and distribution expansion would support the growth. Gross margin would be steady QoQ. EBITDA margin to compress 100 bps YoY on a high base.

Key things to look for are demand outlook, progress on new ventures, raw material price scenario and pricing actions.

Axis Securities

Expect Britannia to report 1-2% YoY revenue growth on back of anniversarization of price hikes and increased competitive intensity. EBITDA margin to remain flat at 19.5% despite gross margin expansion on account of higher ad-spends.

Key Monitorables will be rural demand environment; raw material cost outlook; market share trends, update on core biscuits portfolio and adjacencies.

YES Securities

We estimate Britannia’s base business volumes to grow by 3%. As realizations tail-off further led by anniversarization of earlier price hikes as well as grammage additions done recently, consolidated revenue should grow by just 2.3% YoY.

There is no major risk on the commodity front, we thus, expect gross margin to improve QoQ by 60 bps (-20 bps YoY), leading to EBITDA margin of 19.5% (flat YoY).

EBITDA and adjusted PAT are thus, estimated to grow by 2.4% YoY and -1.4% YoY, respectively.

PhillipCapital

Volume growth to be flat owing to rural slowdown and increased competitive intensity from regional brands. Gross margin to see improvement owing to premiumization and correction in the raw material index. EBITDA margin to remain flat YoY owing to negative operating leverage and higher A&P spends.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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