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Britannia Industries Q1 Review – Volumes, Margins Disappoint: Motilal Oswal


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After displaying resilience in Q4 FY22 volumes despite steep price hikes, Britannia Industries Ltd.’s Q1 FY23 result was disappointing with a low single-digit volume decline.

With further price increases likely in Q2 FY23 (cumulative 6-7% price hike in H1 FY23), the effective price hike will be ~20% YoY. This might delay the eventual volume recovery, especially in a price sensitive category like biscuits.

Britannia Industries’ Q1 FY23 Ebitda margin was also notably lower than expectations at 13.5% (a level last seen in Q4 FY15).

Even though we estimate FY24 Ebitda margin to recoup to 16%, the company’s valuation is rich at 48.1 times FY24E price/earning given the tepid earnings compound annual growth rate of 11.7% over FY22-24E.

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