Britannia Q2 Preview | Net profit to jump 17% on revenue boost, volume growth pegged at 5%

FMCG major Britannia Industries will report its Q2FY23 numbers later today and analysts expect its consolidated net profit to grow 17 percent on-year on the back of a 14.6 percent rise in revenue over the last year.

According to an average of estimates by five brokerages polled by Moneycontrol, the Good Day biscuit maker’s revenue is pegged at Rs 4,135 crore and net profit at Rs 451 crore, while EBITDA margins might come in at 14.1 percent, declining 142 basis points over the same period last year.

The growth in revenue will largely be on the back of price hikes taken by the company last quarter to pass on high input costs. While prices of edible oil and wheat, two key raw materials for the company, cooled off during the last the quarter, the company was sitting on high-cost inventory which will hurt margins.

“Margins should likely bottom out in Q2FY23 and recover starting Q3FY23 in view of sharp 40 percent decline in palm oil price from peak in the past three months,” Kotak Institutional Equities said.

Analysts are forecasting only a 5 percent year-on-year growth in domestic volumes, owing to rural weakness, reduced in-home consumption and grammage cuts in low-unit packs. Negative operating leverage and higher freight costs will also weigh on the second quarter numbers, noted Philip Capital.

While Hindustan Unilever has flagged off concerns on the demand environment with inflation impacting consumption, it will be important to watch out for Britannia’s commentary on downtrading trends. Investors will also keenly monitor the management’s update on product launches and completion of greenfield manufacturing facility in Barabanki, Uttar Pradesh.