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Demand trends healthy, Input cost inflation a concern

We change our FY27/FY28 EPS estimates by -1.7%/2.1%, showing impact of

1) strong demand outlook given 9% volume growth in 1Q27

2) 2.5x growth in MT, Ecom, QC over GT growth with superior mix

3) double digit growth in wafers, rusk and cakes and 30% growth in croissants

4) input cost inflation in sugar, palm oil, milk and fuel cost

The long-term business moat remains intact, while the success of new launches and healthy traction in impulse-led adjacencies across QC/e-com. BRIT is facing input cost inflation across most ingredients and has been able to pass on only 50% of the cost inflation so far. We expect YoY lower margins in 2Q/3Q given high base of 19.5/19.7 (Writeback of phantom stock options and higher GM) which will curtail near term growth. We expect EPS growth of 5.2%/17.3% in FY27/28 showing impact of lower margins and tax writeback in FY27. BRIT trades at 41.1xFY28 EPS which provides a good entry point for 12-15 months perspective. We value BRIT at 50x FY28 EPS and assign a TP to Rs6,579 (vs. Rs6,441 earlier). Retain BUY

Consolidated Financials: volumes increased ~9%:

Consolidated Revenues grew by 8.2% YoY to Rs50bn(PLe: Rs49.97bn). Gross margins expanded by 119bps YoY to 41.5%.(Ple: 41.0%). EBITDA grew by 11% YoY to Rs8.4bn (PLe:Rs8.74bn); Margins expanded by 42bps YoY to 16.8% (PLe:17.5%). PBT grew by 13.2% YoY to Rs 8bn(PLe: Rs 8.30bn). Adjusted PAT grew by 13.4% YoY to Rs6bn (PLe:Rs6.22bn)

Standalone

sales grew by 8.6% YoY to Rs48.3bn(PLe: Rs48.09bn). Gross margins expanded by 104bps YoY to 39.6%.(Ple: 39.0%). EBITDA grew by 12.8% YoY to Rs8.1bn (PLe:Rs8.27bn); Margins expanded by 63bps YoY to 16.8% (PLe:17.2%). PBT grew by 15.5% YoY to Rs 7.8bn(PLe: Rs 7.97bn). Adjusted PAT grew by 15.7% YoY to Rs5.8bn (PLe:Rs5.94bn). BRIT witnessed mid teens revenue growth in end of 1Q.

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