Neutral Britannia Industries; target of Rs 5200: Motilal Oswal

Neutral

Motilal Oswal's research report on Britannia Industries

Britannia Industries (BRIT) posted operating revenue growth of 6% YoY in 3QFY25 (in line) and volume growth of 6% (est. 5%). Other operating income surged 101% due to government grants related to Ranjangaon factory. GM contracted 510bp YoY/280bp QoQ to 38.7% (est. 42%), impacted by rising commodity prices, mainly palm oil (+43% YoY) and Cocoa (+103% YoY). Employee costs dropped 47% in 3Q due to phantom stock revaluation impact of INR750m (employee cost rose 45% in 2QFY25). While quarterly fluctuations persist, annual employee costs remained stable. The company implemented strategic price hikes (2% in 3Q, further 2.5% in 4Q and 1.5% likely in 1QFY26) and cost efficiency (~2.5% in FY26) to offset inflation.

Outlook

With pricing action initiated, we expect revenue growth to remain healthy, along with a gradual recovery in gross margin. We reiterate a Neutral rating with a TP of INR5,200 (premised on 45x Dec’26E EPS).

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