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Resilient topline & tight cost control drive earnings beat

* Resilient topline performance despite subdued demand: Britannia’s consolidated revenue grew 9% to INR 43.7bn (inline with our estimate), while standalone revenue grew 9.2% yoy – driven by necessary pricing interventions (Britannia had implemented 2% price hike in Q3 & further hikes were expected in 4Q).

* Weaker gross margins entirely offset by lower than expected overheads driving strong earnings beat: Britannia’s consol. gross margin compressed 481bps yoy to 39.3% (inline with our estimate), due to inflationary trends in key commodities. Standalone GMs fell by 504bps yoy to 37.3%. Impact of steep GM compression was largely offset by lower staff costs (+1.5% yoy) and savings in other overheads (-8% yoy), resulting in lower consol. EBITDA margin compression of 122bps to 18.4% (136bps above our estimate of 17%). Consol. EBITDA/PAT grew c.2-4% to INR 8.1bn/5.6bn (9%/11.7% above our estimate).

* Britannia effectively navigated through the challenging operating environment and generated savings of c.3% of revenue - driven by strategic pricing actions, quick adaptation of emerging channels and robust cost efficiency initiatives.

* Company expanded its direct distribution footprint to 2.9mn outlets.

* Going ahead, management will focus on healthy and profitable growth, while keeping a close eye on commodity prices.

* Conference call is scheduled on Monday (12th May) at 9AM (Diamond pass link).

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SEBI Registration Number is INM000010361