Asianpaint vs Britannia Q4 FY24

Asian Paints reported Q4 FY24 standalone revenue decline of 1.8% YoY due to a 3.7% price cut, but volume growth remained strong at double digits (~10%). For FY24, volume grew 9% with value up 3%. Gross margins improved aided by raw material deflation and sourcing efficiencies, but PBDIT margins in Q4 were lower YoY and sequentially due to value weakness. Management guided for continued double-digit volume growth in FY25, supported by rural recovery, new Neo Bharat launch targeting the economy segment, and deferred demand from Q4. They expect the value-volume gap to normalize to 5-6%. Risks include potential raw material inflation from geopolitical tensions, down-trading from premium to economy segments, and competitive intensity from new entrants like Birla Opus. Management maintained PBDIT margin guidance of 18-20%.

Guidance read

Double-digit volume growth for FY25: Management expects to continue delivering double-digit volume growth in FY25, supported by rural recovery, Neo Bharat launch, and deferred demand. PBDIT margin guidance maintained at 18-20%: Management reiterated its medium-term PBDIT margin guidance of 18-20%, with levers including supply chain efficiencies and backward integration. Value-volume gap to normalize to 5-6%: Management expects the gap between value and volume growth to be around 5-6% going forward, excluding one-off price cuts. Neo Bharat launch to boost economy segment: The new latex-based product priced at distemper level is expected to drive significant volume growth in the bottom-of-pyramid market.

Risk read

Key risks include Raw material inflation from geopolitical tensions — Management noted that crude and monomer prices are volatile, and any geopolitical disruption could lead to input cost inflation, pressuring margins.; Down-trading from premium to economy segments — Q4 saw some down-trading, especially in rural areas, which could persist if inflationary pressures continue, impacting product mix and margins.; Competitive intensity from new entrants (Birla Opus) — Analysts raised concerns about new competition with aggressive pricing. Management downplayed the threat, but the risk of market share loss remains.; Slowdown in B2B business due to elections — Government project spending slowed in Q4 due to election code, and recovery may be delayed, impacting the B2B segment..

Promise ledger

Of 2 tracked promises, management 0 met, 0 close, 2 missed.

Britannia reported Q4 FY24 revenue of INR 4,014 crore, up 3% YoY, with EBITDA margin at 17.6%, down 4% YoY due to pricing actions and higher A&P spend. Volume growth outpaced revenue at ~6%, driven by market share recovery after price cuts. Management flagged a soft demand environment but expects a rebound post-elections and monsoon, targeting double-digit volume growth in H2. Adjacencies (25% of sales) grew faster than biscuits, with dairy and RTM 2.0 as key growth levers. Commodity outlook is mildly inflationary (3-4%), limiting margin upside. Risk: competitive intensity from regional players could pressure pricing power.

Guidance read

Target double-digit volume growth in H2 FY25: Management aims for double-digit volume growth post-elections and monsoon, driven by market recovery and RTM 2.0. Expect 3-4% inflation in commodities post-elections: Wheat and sugar are expected to be slightly inflationary, with overall inflation manageable at 3-4%. Adjacencies to grow at 1.5x biscuit growth: Adjacent businesses (non-biscuits) are targeted to grow at one and a half times the rate of the biscuit portfolio. RTM 2.0 pilot in H2 FY25, full rollout by FY26: Route-to-Market 2.0 project will pilot in H2 FY25 and take 11-12 months for full implementation.

Risk read

Key risks include Competitive intensity from regional players — Regional and small players are gaining share in biscuits, especially in organized trade, pressuring pricing power.; Commodity inflation could squeeze margins — Expected 3-4% inflation in wheat and sugar may limit margin expansion despite cost efficiencies.; Slow private consumption recovery — GDP growth is driven by capital formation, not consumption; demand recovery may be delayed.; RTM 2.0 execution risk — The 11-12 month project may face implementation challenges and upfront costs without immediate benefits..

Promise ledger

Scorecard data is being built as historical quarters are processed.