Britannia Industries Q1 Review - Margin Trajectory Visible; Weak Start In Q1: Centrum Broking
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Centrum Broking Report
Britannia Industries Ltd.’s Q1 FY23 print was lower than our estimates; consolidated revenue grew 9.0%, while Ebitda/profit after tax declined 9.6%/13.8% YoY.
We reckon, sharp price increases resulted in 2% volume decline, though absolute packets sold remained flat. Management said, given challenging environment, Britannia Industries is vigilant and taking steps through mix of pricing and cost optimisation to revive profitability.
We note resilient top‐line was fueled by distribution expansion in rural markets and successful new launches supported by marketing activities.
Britannia Industries saw sequential inflation of ~7% (14% YoY) driven by industrial fuel (15%), wheat flour (up 20%), and refined palm oil (up 5%).
Gross margin slid to 37.3% (down 194 bps), causing lower Ebitda margin at 13.7% (down 282 bps). Profit after tax declined to Rs 3.4 billion (down 13.8%).
Management expects margin trajectory to improve by 300 bps in Q3/Q4 and also aided by easing of commodity prices.
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