BRITANNIA

Britannia Industries (BRIT) posted total consolidated revenue growth of 9% YoY in 4QFY25 (in line) and volume growth of 3% (est. 4.5%). GM contracted 480bp YoY to 40.1%, impacted by rising commodity prices, mainly palm oil (+54% YoY), Cocoa (+83% YoY) and Milk (+21% YoY). Employee expenses rose 1.5% YoY, while other expenses declined 11% YoY. The strategic price hikes by BRIT and cost efficiency initiatives (2.5% in FY25) supported margins. EBITDA margin contracted 120bp YoY to 18.2%, EBITDA grew 2% YoY to INR 8b. Management highlighted that EBITDA margin will be maintained at 17-18%. We model EBITDA margin of 18% in FY26E and 18.3% in FY27E. BRIT’s focus on innovation, distribution expansion, marketing, pricing actions, RTM 2.0 and dairy capacity expansion will drive growth. However, we await a stable demand recovery in core categories amid high macro inflation and price hikes while closely monitoring margins. We reiterate our Neutral rating with a TP of INR 5,850 (premised on 50x FY27E EPS).