Britannia Q4 Results: Profit Soars 47%, Easing Raw Material Prices Aid Margin

Britannia Industries Ltd.'s profit for the March quarter rose and margin expanded on the back of softening raw material costs.

Net profit of the maker of Good Day and Tiger biscuits rose 47% year-on-year to Rs 558.66 crore in the quarter ended March, according to an exchange filing. That compares with the Rs 501.95 crore consensus estimate of analysts tracked by Bloomberg.

Britannia Q4 FY23 Highlights (Consolidated, YoY)

• Revenue up 13% to Rs 4,023.18 crore, against the Rs 4,066.54 crore forecast.

• Operating profit rose 46% to Rs 800.89 crore, as compared with the estimated Rs 715.4 crore.

• Margin stood at 19.9% versus 15.5%, beating the consensus estimate of 17.6%.

• Volume growth came in at 1%.

Varun Berry, vice chairman and managing director of the company, attributes the company's growth to significant distribution gains.

"We continued to accelerate our rural journey, with focus on enhancing reach, partnering with 28,000 rural distributors and sustaining our diligent market practices. Our brand and distribution strength also reflects in the consistent market share gains over the last 10 years," he said.

For biscuits, the company began commercialising two greenfield units—in Uttar Pradesh and Tamil Nadu—along with brownfield expansion in Odisha during the quarter. It has also commercialised three new lines of rusk this quarter. "This is in line with our strategy to make in-house, our exclusive range of products, and further enhance productivity," said Berry.

The company also scaled up its capacity of drinks and other dairy lines to leverage seasonal opportunities and enhance supplies to bakery division for captive consumption, he said.

On the profitability front, Berry said the company benefited from softening input prices on the back of correction in palm oil and packaging materials, while flour prices continued to trend higher.

"Our intensified cost efficiency programme, coupled with moderation in commodity inflation, led to a healthy operating margin in this quarter," he said. "We are being vigilant of the competitive actions in the marketplace and closely monitoring the commodity situation in the country, especially around wheat and sugar. We shall deploy appropriate pricing actions to remain competitive and drive market share growth."

In comparison, the profit of FMCG firms like Hindustan Unilever Ltd. and Nestle India Ltd. also rose in this quarter, largely aided by price hikes. However, inflationary pressure continued to weigh on margins. Most packaged consumer goods makers expect inflationary pressure to remain in the near term, which will lead to a delay in margin recovery.

Shares of Britannia ended 0.89% higher on Friday before the results were announced, as compared with a 1.02% decline in the benchmark NSE Nifty 50.