The Britannia Industries stock is down about 7% in the past two days after its March quarter (Q4FY26) volume growth came in at a subdued 5.5%. The biscuit maker’s total consolidated operating revenue growth stood at 6.5% year-on-year to ₹4,719 crore. Growth moderated in March compared with January-February, mainly due to supply disruptions in international business following the West Asia war. Further, the dual (lower) pricing issue due to competition in India also hurt Britannia’s growth in the wholesale/business-to-business channels, which account for about 25% of sales. Rivals operated at ₹4.5/9 price points, versus Britannia’s ₹5/10.
The management believes growth will stabilise from Q1FY27. This would be supported by the easing of the dual pricing issue, given raw material inflation. Channel checks by Nomura Research’s analysts suggest that Parle (unlisted) has moved to ₹5/10 price points (about 65% of Britannia’s business) from mid-March. “However, we believe that they will have nearly two months of inventory in the channel, and thus the positive impact of this change to Britannia’s numbers will likely be visible from Q2,” said the analysts in a report dated 10 May.
Gross margin continued to expand year-on-year for the third straight quarter, but at 42.1% in Q4FY26, up 203 basis points (bps), it fell short of expectations. Ebitda margin dipped 9 bps to 18.1% on higher advertising & promotion (A&P) expenses. Higher input costs and increased A&P expenditure are likely to cap steep margin expansions in the near term.
Cost pressure
One fallout of the West Asia war is the significant rise in fuel costs and ocean freight rates. Britannia said there hasn’t been a material disruption to production operations at its India manufacturing facilities due to industrial fuel supply constraints. The company is initiating calibrated price hikes from Q1FY27. Further, it is optimizing sourcing between India and international manufacturing facilities for key geographies to mitigate supply-related challenges, with full operationalisation expected by mid-May.
After Q4FY26 results, many brokerages have cut Britannia’s earnings estimates for FY27 and FY28. The percentage of earnings per share (EPS) estimates cuts is in the range of 3-8%. The stock trades at almost 47 times FY27 estimated earnings, as per Bloomberg consensus data. Investors will want to see evidence of faster growth. “Re-rating is contingent on the pace of acceleration in sales growth, creation of new growth drivers, and more broad-based play in the foods segment,” said JM Financial Institutional Securities. Britannia believes it has to create new pillars of growth such as investing in its brands, premiumization, and creating new verticals for growth.