Britannia Industries Q3 Results Review - Volumes To Improve; Current Margins Near Peak: Yes Securities

Yes Securities Report

Britannia Industries Ltd. Q3 FY24 headline performance was largely in-line with our subdued estimates. Volume growth for the quarter at 5.5% (3-3.5% pack growth) surprised us positively (versus estimate 3% volume growth).

This along with higher price cut QoQ and lower other operating income meant that topline was in-line with our expectations. Gross margin improved ~100 basis points QoQ (40 bps ahead of our expectation), even after taking price cuts, largely led by commodity basket deflation of 3-4% in Q3 FY24.

Judicious pricing actions have also meant that market share trends have come back to growth from being flat in H1 FY24.

Going ahead, we expect volume growth momentum to improve further but negative pricing along with peak margin base will mean that earnings growth will likely remain subdued in the very near term. Maintain Neutral rating with a revised target price of Rs 5,140.

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