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Prabhudas Lilladher Report
We cut our FY23/24 earnings per share estimates of Britannia Industries Ltd. by 1.9%/1.2% on the back of continued inflationary trend in key commodities, laminates and packaging materials.
Britannia needs to take a 10% price hike at spot commodity prices which will largely be passed through grammage cuts.
Given the palm oil ban in Indonesia and Ukraine-Russia war, essential commodities will take further time to settle down and we anticipate further gross margin pressure in H1 FY23.
We believe volume growth outlook will remain stable given 4% Q4 volume growth in a challenging scenario (4-5% impact of grammage reduction in 65% of portfolio) and success of new launches like Potazos, Milk Bikis (Atta), Good Day Harmony launch and pan India launch of mixed fruit Croissant.
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