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ICICI Securities Report
Britannia Industries Ltd. continues to report good headline prints – mid-single digit volume growth amid rural slowdown and inflationary raw material (lower grammage in price point packs implies unit/packs growth would have been higher).
We reckon, in Q4, it had benefited from long-term commodity contracts. Road ahead on input cost index is a tough one - headroom for grammage reduction is lower now (for some time).
Consensus (including us) expects Britannia to invest in new categories, however, pressure on core margins (15.5% in Q4 FY22) is likely not providing ammunition.
We believe, it will now have to re-earn the (premium) multiple as consensus was generous in previous re-rating cycle.
Going forward, success of (at least few) new segments and ramp-up of adjacent categories is imperative.
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