Target: ₹5,650

CMP: ₹4,871.10

Britannia Industries’ Q3-FY24 y-o-y numbers appear weak, but this was on a high base and 2Y sales/EBITDA CAGRs of 9/23 per cent were healthy. Volume growth of 5.5 per cent y-o-y was offset by price cuts in Q3; we expect revenue growth to accelerate as the impact of price cuts (in the form of higher grammage) subsides.

Management expects a return to high single-digit volume growth in the near term and would prioritise revenue growth while maintaining margins. Within FMCG, foods category is growing faster than HPC, and we expect this trend to continue. Britannia is a leading player with presence across food categories, and is one of our preferred consumer picks.

Our earnings estimates and view remain unchanged; retain Outperform - Post the results, we lower our sales estimates and raise our margin estimates. Our FY24E-26 earnings are largely unchanged. We continue to value Britannia at 50x Dec-25E P/E, and our TP is unchanged at ₹5,650.

Key risk to the upside: While we continue to see opportunities for industry growth and volume market share improvement in biscuits, stronger-than-expected performance from new categories could present an upside risk.

Dowinside risk: An increase in competitive intensity and resultant weakness in volumes and margins.