Britannia Industries Q4 Results Review - Another Earnings Beat Led By Record Margin Performance: Systematix

Systematix Research Report

Britannia Industries Ltd. delivered another earnings beat despite sluggish volumes, with gross and Ebitda margins making new highs benefiting from softening inflation and aggressive pricing actions. Key takeaways are:

1. revenue growth of 13% with ~2% volume growth and ~12% growth in packs sold,

2. market share continued to improve for 40th quarter with the gap with the number two player up sharply in FY23,

3. not much impact of rural slowdown for Britannia, given its distribution efforts,

4. 688 basis points YoY improvement in gross margin and 442 bps YoY increase in Ebitda margin which should moderate with expected price cuts to remain competitive and drive volumes/share gains,

5. strong growth in multiple innovative products in both biscuits and new categories,

6. non biscuit portfolio grew 1.5 times of company growth in FY23 led by dairy, cakes and croissants;

7. capex of Rs five-six billion in FY24E to increase in-house manufacturing from 57% to 65%,

8. positive growth outlook with distribution efforts continuing and innovation pipeline being strengthened further and

9. Production linked incentive incentives of Rs 150-200 million per quarter to aid other operating income.

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