BRITANNIA - Britannia Industries Ltd. Share Price

Management's outlook for Britannia Industries indicates a cautious optimism for recovery in the FMCG sector, as expressed by Executive Vice Chairman Varun Berry during the earnings call. The company's fourth quarter turnover reached INR 4,376 crores, reflecting a 9% growth on a 12-month basis and a 12.4% growth over two years. For the full fiscal year, revenue from operations was INR 17,535 crores, marking a 6% growth year-on-year and a 10% growth over two years. The profit after tax for Q4 was 12.8% of revenue, with a year-on-year growth of 4%.

Berry highlighted that there are signs of recovery in the market, but it is not expected to be sudden or pronounced. The company is focused on sustaining margins amid ongoing inflation while remaining competitive. Key financial metrics underscored during the call included an operating profit margin of 16.4% for the year and profit after tax of 12.5%, demonstrating solid performance.

Looking ahead, management emphasized their commitment to monitoring commodity prices, particularly wheat, which remains uncertain in terms of future inflation. They also seek to ensure pricing strategies do not alienate customers, especially given the inflationary pressures affecting all sectors.

Management announced ambitious growth plans, targeting a return to double-digit growth as the economy stabilizes. The distribution network continues to grow, reaching 28.7 lakh outlets from 27.9 lakh a year prior, supporting their strategy to enhance penetration and volume. Furthermore, cost-saving initiatives achieved 9 times savings compared to their 2013"“14 baseline, aiming for a target of over 2.5% of revenue moving forward.

Overall, Britannia's focus on adjacencies, innovations, and sustainable growth underpins their future performance strategy, aiming to adapt swiftly while capitalizing on market opportunities.

1. Question: "Was there a significant impact of Kumbh Mela on your sales this quarter?"

   Answer: "Abneesh, we don't rely on one event like Kumbh Mela for overall sales, although we performed well during it. Our growth is supported by broader trends, and while we've seen recovery signs, it's more gradual. I'm optimistic about this trend continuing into next year."

2. Question: "What is your confidence level regarding recovery in FY '26?"

   Answer: "I am reasonably optimistic about recovery. While it won't be rapid, I believe we're on a positive trajectory, and the gradual recovery we've observed will carry into the next year."

3. Question: "Have you noticed any changes in competitive intensity from D2C brands?"

   Answer: "There hasn't been a significant impact from D2C players. We're growing well, and while competition is present, we maintain a strong position. Rusk has many small players, and I believe our brand loyalty and product quality will keep us competitive."

4. Question: "How is the cheese category performing post re-launch?"

   Answer: "Post-re-launch, we're seeing over 40% growth in traditional trade for cheese. We've equalized pricing across channels to address previous disparities and are optimistic about significant future growth in this category."

5. Question: "What volume growth do you expect considering inflation?"

   Answer: "While we have experienced inflation, we aim for both revenue and volume growth. Our pricing strategy this year has been aggressive, so we anticipate robust growth on both fronts, contingent on inflation rates."

6. Question: "Do you foresee further price increases given the correction in raw material costs?"

   Answer: "We don't anticipate significant price reductions even with some corrections in raw materials, as many competitors have also raised prices recently."

7. Question: "What is the performance outlook for your adjacency categories?"

   Answer: "Adjacencies like croissants and milkshakes are performing well, with substantial revenue growth. We're committed to enhancing these areas through focused marketing and distribution strategies."

8. Question: "What is your strategy on entering new categories?"

   Answer: "While we focus on existing adjacencies, we remain open to future opportunities. We're seeing solid growth in current categories, but we will carefully evaluate any new product introductions based on market potential."

9. Question: "What is your outlook on cost savings for FY '26?"

   Answer: "We plan for cost savings of over 2.5% of our top line for FY '26, with past years seeing a 9x increase in efficiencies. Our focus remains on sustainable cost leadership through various initiatives."

10. Question: "What is the revenue growth outlook for FY '26 and the premium product segment?"

    Answer: "We aim to return to double-digit revenue growth. Our premium products are witnessing success, and we'll continue to build on this foundation with new offerings in the coming months."