Britannia shares in focus as Q3 margins improve despite GST disruption in October

Shares of Britannia Industries are expected to react to the company's December quarter results on Wednesday, February 11, with revenue growth broadly in-line with expectations.

Brokerage firm Nomura has a 'Buy'’ rating on Britannia Industries with a price target of ₹7,000 per share.

The brokerage said Q3 volume growth was better, sales were largely in-line with expectations, and margins beat estimates.

Gross margin expanded by 400 bps year-on-year and 105 bps quarter-on-quarter to 42.7%, above Nomura's forecast of 42%, driven by benign input costs. This led to strong gross profit growth of 18% year-on-year.

Adjusted EBITDA grew 16% year-on-year to ₹980 crore, well above the estimate of 13.9%.

Britannia stock currently trades at around 45x its March 2028 estimated earnings.

Britannia Q3 review

The company's EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) grew on 450 basis points expansion in gross margins.

For Q3, Britannia reported profit after tax of ₹682.1 crore, slightly ahead of the Street estimate of ₹678 crore, marking a 17% year-on-year increase.

Revenue came in at ₹4,969.8 crore versus the CNBC-TV18 poll of ₹4,960 crore, translating into an 8.2% growth over the same period last year.

EBITDA rose 16% year-on-year to ₹980.3 crore, beating estimates of ₹972 crore. Operating margins expanded to 19.7% from 18.4% a year ago, aided by a 450 bps improvement in gross margins.

Management said that October was impacted by GST transition-related disruptions, but business momentum improved in November and December, with growth of around 12%.

The company said healthy demand across biscuits and adjacent categories, along with a relatively stable commodity environment, supported performance during the quarter.

Separately, Britannia announced the appointment of Puneet Das as Chief Marketing Officer.

Das brings over 24 years of experience, having worked across companies such as Marico, Pepsi, GSK Consumer, and Tata Consumer Products, and has led brands including 7Up, Boost, Horlicks, Tata Tea, and Tetley.

Britannia Industries shares ended Tuesday's session 0.55% higher at ₹5,875. The stock is down around 2% on a year-to-date basis.