Britannia Industries, one of India’s leading FMCG giants known for products like Marie Gold and Good Day, is set to release its March quarter (Q4FY25) results on May 8, 2025. Analysts forecast that the company could report a degrowth in net profit, primarily due to the impact of commodity inflation, muted consumer sentiment, and price hikes taken during the quarter.

According to a Moneycontrol poll of nine brokerages, Britannia’s revenue is expected to grow 7.2% YoY to reach Rs 4,362 crore, but net profit is projected to fall 5.5% to Rs 509 crore as compared to Rs 538.2 crore in the same quarter last year.

Moderated Volume Growth a Key Concern

One of the biggest reasons behind the expected drop in profit is lower volume growth. After reporting 8.2% volume growth in the first half of FY25, the pace is anticipated to slow in Q4.

This slowdown is attributed to the price hikes implemented by the company — a 2% increase in Q3FY25 followed by another expected hike of 2-2.5% in Q4FY25. Additionally, grammage reductions (offering less quantity at the same price) also played a role in reduced offtake.

As inflation remains elevated, especially for key raw materials like wheat and palm oil which together form around 45% of Britannia’s input costs, the company prioritized volume over margins, leading to downward pressure on profitability.

Margins Under Pressure from Commodity Inflation

Margins are expected to take a hit as Britannia faces the heat from commodity price inflation. According to Kotak Institutional Equities, the EBITDA margin may contract by 260 basis points YoY, standing at 16.8% in Q4FY25.

This contraction is due to a combination of raw material inflation, increased employee cost, and weaker operating leverage.

In Q3FY25, employee costs were unusually low due to a Rs 75 crore provision related to stock appreciation rights. With that one-time impact gone, employee expenses are expected to normalize at Rs 188 crore, or about 4.1% of revenue, further weighing on the operating margin.

Analyst Expectations Vary: Could a Surprise Move the Stock?

Brokerage estimates for Britannia’s Q4 vary in a narrow band, but any significant deviation from consensus could lead to sharp stock movement.

While the most optimistic estimate sees flat profit YoY, the most bearish view expects a 10.6% decline in net profit, reflecting uncertainty over how much inflation and competition have impacted performance.

Urban Consumption & Raw Material Trends in Focus

Analysts are keenly watching for signs of demand recovery in urban areas, where Britannia has faced pressure due to weak consumption trends over recent quarters.

Additionally, the movement of input prices — especially of wheat and palm oil — will be key variables to monitor, as they directly influence EBITDA margins and overall profitability.

Further, experts are paying attention to the rising competition from unorganised players, especially in price-sensitive segments, which could eat into Britannia’s market share and margins.

Summary of Key Brokerage Views

• Kotak Institutional Equities: Expects 260 bps YoY EBITDA margin contraction; employee cost normalizing to Rs 188 crore.

• Emkay Global: Expects volume prioritization to compress gross margins; price hikes may not fully offset cost pressures.

• Consensus estimate: Rs 509 crore net profit and Rs 4,362 crore revenue.

What Lies Ahead for Britannia?

While the short-term earnings may be under pressure, Britannia’s long-term strategy remains focused on brand expansion, rural growth, and product innovation. However, in the near term, much will depend on:

• Stability of raw material prices

• Recovery in urban and semi-urban demand

• Easing of inflationary trends

• Strategic pricing and grammage control

A better-than-expected demand environment or sharp reduction in input prices could result in upside surprise in earnings and stock movement.

Conclusion

Britannia Industries’ Q4FY25 earnings report is shaping up to be a closely watched event, especially as it comes against the backdrop of commodity inflation, muted consumption, and pricing actions. While analysts predict a dip in profits, the market will closely monitor volumes, margins, and urban consumption trends to gauge the company's future trajectory.

As one of India’s most trusted FMCG brands, Britannia’s performance offers a critical lens into broader consumer sentiment and rural-urban demand dynamics across the country.

The Current active IPO are Srigee DLM, Manoj Jewellers, Wagons Learning, Kenrik Industries.

The Closed IPOs are  Arunaya Organic, Ather Energy, Iware Supplychain Services.

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX.

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst.