Britannia Industries Q2 Earnings: 9.6% Decline in Net Profit, 8% Volume Growth Achieved

Britannia Industries Q2 Earnings
Britannia Industries Q2 Earnings: 9.6% Decline in Net Profit, 8% Volume Growth Achieved

Company Overview

Britannia Industries Ltd., one of India’s leading FMCG companies, has established a prominent position in the food and beverages sector, primarily focusing on bakery products. Known for its vast portfolio of biscuits, bread, cakes, dairy products, and other snacks, Britannia enjoys high brand recognition and consumer trust across India and in various international markets. Britannia is best known for its biscuit brands, commanding over 30% market share in India. Britannia has established a strong distribution network of 30000, reaching both urban and rural markets, helping it maintain a leading position in India’s competitive biscuits market. Britannia has a growing international presence, operating in over 70 countries, including the Middle East, Africa, North America, and Southeast Asia. Britannia has 13 manufacturing facilities across India, producing a wide range of products with a focus on quality and efficiency. It also has an extensive network of third-party manufacturing units. Britannia’s robust portfolio, brand strength, extensive distribution, and continuous innovation place it at a strong position within India’s FMCG sector.

Industry Outlook

The Indian Fast-Moving Consumer Goods (FMCG) industry is one of the most robust and dynamic sectors, driven by strong demand, population growth, rising income levels, and increased urbanization. The Indian FMCG sector is projected to grow at a CAGR of 10-12% over the next five years, driven by rural market expansion, rising incomes, and a favourable demographic dividend.  As of recent estimates, the FMCG market in India is valued at over $110 billion, making it the fourth-largest sector in the Indian economy. Rural demand now contributes to 45-50% of total FMCG sales and is expected to continue growing. Rising disposable incomes are shifting consumption patterns toward premium and value-added products. Online FMCG sales have grown rapidly, particularly in urban areas, and are expected to account for 10-12% of FMCG sales by 2025.

Financial Summary

INR Cr.Q1 FY25Q2 FY25FY23FY24
Revenue425046681630116769
EBITDA75378028313167
OPM18%17%17%19%
PBT68171530332913
Net Profit50553223162134
NPM11.8%11.4%14.2%12.7%
EPS20.9922.0696.3988.84
C&CE215250198446

Business Segments:

  • Bakery Business: It involves many sub segments in it, Biscuit is a major part of this segment and is continued to grow. Cakes are in category continuous to grow in of ₹5-10 price points products and large priced products are having substantial growth. Rusk is having some tough competition from its strong new entrants. In bread category, it is having a great growth as more demand from consumers with over turnover of ₹450 crore.
  • Dairy Business: It involves cheese and drinks like Lassi which is showing a healthy double digit growth. Packaged liquid milk remains a key growth driver of the industry, healthy demand and growth is also expected in cheese, yogurt and other value added dairy products.
  • Adjacent Business: This segment has Wafers which is highly fragmented market of ₹1000 crore. Croissant is also a product of Britannia in this segment, able to achieve good growth in urban areas. Salted snacks or packets is a growing at double digit rate and is most profitable and high volume category.
  • International Business: International Business for the Company is largely centered on Middle East, Americas, Africa and Asia Pacific. The business environment in these geographies is highly competitive with the presence of large local and international players. And exports contribute around 6% in the revenue.

Subsidiary Information:

These are majorly big subsidiaries of Britannia Industries established in India and all over the world. But, there are total over 25+ subsidiaries under it.

  • Manna Foods: Manna Foods allows Britannia to tap into the health and wellness market, expanding its footprint in the packaged foods segment. The yearly turnover for this subsidiary is ₹367 crore, It provides traditional and health-focused foods like millet-based products and ready-to-cook items.
  • AI Sallan Food Industries: This subsidiary helps Britannia access new markets and diversifies revenue streams outside of India. It manufactures and distributes bakery products, primarily in Oman and the Middle East. It had a main focus of international expansion and it has a turnover of ₹ 231 crore in FY24.
  • Britannia Nepal Pvt Ltd: This entity manufactures and distributes Britannia’s core product lines in Nepal, catering to local demand and establishing a stronger footprint in South Asia. Enables Britannia to reduce logistics costs and gain market share in Nepal’s packaged food sector.
  • Strategic Foods International Co. Ltd: It is based in Dubai have product categories of biscuit, cookies and cakes. Predominantly in the Middle East and Africa, where it taps into a growing demand for packaged food and snacks. It plays a key role in diversifying Britannia’s revenue streams beyond India, supporting the company’s goal of becoming a global food brand.

Q2 FY25 & Business Highlights

  • Revenue of ₹4668 crore in Q2 FY25 up by 5.29% YoY from ₹4433 crore in Q2 FY24.
  • EBITDA of ₹780 crore in this quarter at a margin of 17% compared to 20% in Q2 FY24.
  • Profit of ₹532 crore in this quarter compared to a ₹586 crore profit in Q2 FY24.
  • Metro FMCG growth rate is lower compared to Urban and Rural regions of India.
  • Adjacent Businesses are doing really well in cake, wafers, Rusk, Cheese and Drinks.
  • Commodity prices of Sugar, Cocoa, Flour Oils, etc. are increasing due to inflation, which will affect the profitability.
  • Capex of ₹450-₹500 crore is planned to use in FY25, through internal accruals, long-term debts and cash and use it to expand in India and International markets.

SWOT Analysis:

Strengths

  1. Established brand with strong recognition.
  2. Wide-ranging product portfolio.
  3. Broad and effective distribution network.

Weaknesses

  1. Heavy reliance on the biscuits segment.
  2. High sensitivity to input cost fluctuations.

Opportunities

  1. Expansion into dairy and health food categories.
  2. Potential growth in untapped rural markets.
  3. Opportunities for mergers, acquisitions, and partnerships.

Threats

  1. High levels of competition in the market.
  2. Volatility in raw material prices.
  3. Potential impacts from economic slowdowns.
  4. Rising health consciousness shifting consumer preferences.

Leave a Reply

Your email address will not be published. Required fields are marked *