Britannia's Q4 revenues may rise up to 14% YoY led by volumes, say analysts

Britannia Industries Q4 preview: Though higher advertising spends may have some impact on EBITDA margins sequentially, price hikes would help expand margins up to 231 basis points (bps), said analysts

Britannia Q4FY23 preview: FMCG major Britannia Industries is likely to register up to 14.4 per cent year-on-year (YoY) growth in revenues to Rs 4,014 crore in the January-March quarter (Q4FY23), led by mid-single-digit volume growth, estimated analysts. The biscuit maker will announce Q4FY23 results on Friday, May 5.
 

According to brokerages, though higher advertising spends may have some impact on Ebitda (earnings before interest, tax, depreciation, and amortisation) margins sequentially, price hikes would help up to 231 basis points (bps) expansion on a YoY basis to 18 per cent in the March quarter. 
 

Adjusted profit-after-tax (PAT), meanwhile, is expected to grow up to 31.3 per cent YoY to Rs 499 crore in Q4FY23 from Rs 380 crore in Q4FY22.
 

At the bourses, shares of Britannia surged over 5 per cent so far this calendar year (CY23), as against 0.5 per cent rise in the S&P BSE Sensex.
 

Key monitorables: Rural demand environment, raw material cost outlook, market share trends, update on core biscuits portfolio, adjaciences, and inter-corporate deposits (ICDs). 
 

Here are top brokerage estimates for Britannia's Q4FY23 numbers:
 

Motilal Oswal

The brokerage firm expects 2 per cent volume growth in the base business in Q4FY23, with improvement in both gross as well as Ebitda margin by 270 bps, and 220 bps, respectively, on a YoY basis. Analysts said that they are watchful of management's commentary on raw material trends, as well as ICDs. They shared a 'neutral' stance on the counter, with a target price of Rs 4,500 per share.
 

Prabhudas Lilladher

Analysts said that the consumer trends appear intact for Britannia Industries in the March quarter. Moreover, they forecast gross margins to improve 245 bps YoY to 40.5 per cent, and Ebitda margins by 254 bps YoY to 18 per cent in Q4FY23. Adjusted PAT, meanwhile, is estimated to grow 39.3 per cent YoY to Rs 526 crore. 
 

Axis Securities

The brokerage firm pegged 14 per cent YoY revenue growth to Rs 4,014 crore in Q4FY23, on the back of distribution expansion, market share gains, and better mix. However, they said that rural weakness shall be checked. Though higher ad-spends might have some impact on margins sequentially, but they expect up to 230 bps YoY expansion to 18 per cent in Q4FY23 from 15.7 per cent in Q4FY22.
 

Sharekhan

Analysts model 16 per cent YoY revenue growth to Rs 4,103 crore in Q4FY23, with 2-3 per cent volume growth, and price-led growth at 13 per cent. In-line with 27.6 YoY increase in operating profit, PAT is likely to grow 27.5 per cent YoY to Rs 482 crore in the March quarter. Price hikes, along with better mix, would further help expansion of operating margins by 161 bps YoY to 17.1 per cent.