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IDBI Capital Report
Britannia Industries Ltd.'s Q1 FY23 result was below our estimates. Revenue grew 9% YoY while volume declined 2%. Input cost inflation in wheat and palm oil remained benign and grew by 80% and 90% YoY respectively. As a consequence; operating margins contracted 182-274 basis points YoY.
Britannia expects to take 6-7% more price hike in Q2 FY23 to mitigate current inflation. Company expects margins to reach pre-Covid levels after Q2 FY23.
Distribution expansion is tracking well; general trade is more profitable than modern trade. Penetration in rural market is as per expectations (grew 1.5 times of all India growth rate).
Revenue from Milk Bikis crossed Rs 10 billion mark. Croissant has now been launched nationally (currently is present only in Kolkata and Chennai).
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