Britannia Industries Ltd — Q2 FY24
Britannia reported Q2 FY24 revenue of ₹4,370 crore, flat YoY, with volume growth of just 20 bps.
neutral
medium
✓ Verified against BSE filing
Claim Ledger
Did management answer the analysts?
Every material analyst question, graded on whether management actually answered it — with the verbatim exchange and quantitative claims checked against filed numbers.
54%Questions answered3Evaded / deflected12Questions auditedConsistentNumbers vs filing
Answered
Medium priority
Innovation in Makhana Better Snacks: product range, margins, distribution
Asked by Abneesh Roy, Nuvama Institutional Equities
Management directly answered all three sub-questions about product range, margins, and distribution.
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Question
My first question is on the innovation in terms of the Makhana Better Snacks. My question here is, under Better Snacks, will we see a much bigger plethora of products in the medium-long term? Second, Makhana is a very commoditized, so how are the margins here? Why do this? And third is, will this have a very wide distribution, or this is more of bigger outlets and more of the top 20 cities kind of a market?
Varun Berry, Vice Chairman and Managing Director
So Better Snack Company is basically a brand that we will try to leverage for products which are healthier snacking products. So definitely, this is going to be a platform for us for the future. Makhana is, I wouldn't say it's commoditized, Abneesh. I think it's a very small category, and we are not looking at distributing it widely. This is going to be a modern trade, e-commerce launch only.
Partial answer
Medium priority
Update on salty snacks scale-up and relation to Better Snacks
Asked by Abneesh Roy, Nuvama Institutional Equities
Management acknowledged the question but provided no quantitative update on scale-up, only qualitative test market status.
no scale-up numbers givenno timeline for national launch
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Question
And slight related question, in terms of the salty snacks, which you have been trying given your very strong experience in the previous company, you have also tried that under Britannia past few years. So will that work in a way with the Better Snacks? And any update if you can share on salty snacks, how is the scale-up?
Varun Berry, Vice Chairman and Managing Director
Abneesh, that's a very tough category, and we want to make sure that we get all the data required before we do a wider launch. So even at this point in time, it's in test market. And as we have gone through the months, we've realized that there are so many things to learn from these test markets, and every month, there are new things coming up.
Evasive
High priority
Whether price-based competition is largely behind and market share gains
Asked by Avi Mehta, Macquarie
Management discussed general FMCG dynamics but did not directly address whether price competition is behind for Britannia.
did not directly answer whether competition is behindgave general market commentary instead
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Question
Sir, I just have two questions. One, I wanted to understand your comment on market share gains a little better and whether you believe this suggests that the price-based competition is largely behind us. Would you see it this way, or I would love to hear your comments on that one, sir.
Varun Berry, Vice Chairman and Managing Director
So the trend, if you were to study trends in most categories, most FMCG categories, what happens is that in inflationary times, there are these smaller players who just go out of business, right, because they can not get there with the cost structures that they have. ... But once the commodity prices start to come down, they again start to give big discounts and big margins, and they start to come back to play in the market.
Declined
High priority
Whether EBITDA margin guidance for FY24 needs revision given H1 performance
Asked by Avi Mehta, Macquarie
Management declined to answer by denying any guidance was given, despite analyst referencing prior commentary.
denied giving guidancerefused to answer
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Question
Now, the first-half margin performance, given this first-half margin performance, do you see a need to revisit your flattish EBITDA margin guidance for FY 2024?
Varun Berry, Vice Chairman and Managing Director
We don't give any guidance. Which guidance did we give? Did we give any guidance on EBITDA margin?
Partial answer
Medium priority
Focus state growth slowdown and contribution of these states to revenue
Asked by Shirish Pardeshi, Centrum Broking
Management explained the slowdown due to rural weakness but did not quantify the revenue contribution of focus states as asked.
did not provide revenue contribution of focus states
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Question
In the beginning, you mentioned that focus state growth has come down. So would you be able to give some more qualitative comments on what's happening in UP, Bihar? Because my understanding is a strong glucose market. So maybe qualitatively, you can add. And maybe what is the contribution of these four focus states to our revenues?
Varun Berry, Vice Chairman and Managing Director
See, what's happened is, as I was saying in the beginning as well, these markets are predominantly rural, right? And the rural growths, which were at about two times urban growth till last year, are now lower than urban growth this year, right? So rural growths have come down overall, right? And that's the reason why these growths have come down.
Answered
High priority
Packet growth for the quarter and volume loss concerns
Asked by Shirish Pardeshi, Centrum Broking
Management directly provided the packet growth figure (flattish).
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Question
So the reason why I'm saying because normally, you used to give in the beginning, 'What is the packet growth?' And this number, you have not given this time. So I was wondering whether the volume loss is primarily because of this. So maybe if you can share, what is the packet growth you have seen in the quarter?
Varun Berry, Vice Chairman and Managing Director
The packet growth this quarter has been flattish, Shirish. So yeah. It's been flattish.
Partial answer
Medium priority
Ad spend quantum and expected level in next two quarters
Asked by Shirish Pardeshi, Centrum Broking
Management gave a percentage increase but not the absolute number or future guidance as asked.
did not provide absolute ad spend numberdid not give future settlement level
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Question
My second and last question on the ad spend. Most of the FMCG companies have upped the ad spend in the recent quarter. So would you quantify what is the ad spend number which has happened and where it will settle in the next two quarters?
Varun Berry, Vice Chairman and Managing Director
So we have also, between the consumer promotions that we are running and all of the advertising that we are doing behind our brands, we have raised the ad spends, well, not ad but total advertising and promotion spends by about 1.5%. But it might not show in the P&L because some of the promotions, which are grammage-based, will not show in the numbers.
Partial answer
Medium priority
Britannia's play in the INR 9 trillion branded F&B category and specific subcategories
Asked by Aditya Soman, CLSA
Management discussed strategy but did not quantify the opportunity or specify new subcategories with a right to win.
did not quantify potential play sizeno specific subcategories highlighted beyond existing ones
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Question
So firstly, you highlighted this whole branded F&B category being INR 9 trillion. Would you, I mean, how much of a play can Britannia make in that category? And any specific categories or subcategories within that that you want to highlight where you feel that Britannia potentially has a right to win?
Varun Berry, Vice Chairman and Managing Director
So that's a great question. Now, we are, I would say, probably the most focused company in terms of what we do. ... We are basically in the bakery space and dairy. We are doing some experiments with salty. We are looking at some of the other categories as well. But we are staying close to the knitting so that we don't go too far from where our strength lies.
Answered
High priority
Volume growth or decline for the quarter and reason for QoQ drop in employee cost
Asked by Percy Panthaki, IIFL Securities
Management directly answered both questions with specific numbers and explanation.
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Question
Firstly, if you could give the volume growth or decline for this quarter? And secondly, if you could explain the big QoQ drop in the employee cost, that would be very helpful.
Varun Berry, Vice Chairman and Managing Director
Your first question was volume growth. It's flat. It's just about 20 basis points, right? So volume has been flat. The second question was on employee costs. There are some base issues. Otherwise, there's no real change in employee cost. There were some options, etc., which were in the last year. So there's no change.
Partial answer
High priority
Breakdown of reasons for weak growth: high base, demand weakness, competition
Asked by Percy Panthaki, IIFL Securities
Management discussed each factor qualitatively but did not allocate percentages as explicitly asked.
did not provide percentage allocation as requested
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Question
So the poor growth that we have seen this quarter, could you break the reasons up into two or three parts? So one is that there is a high base. Second is there is a general FMCG demand weakness. Third is that there is this local and regional competition, which is getting active. So if these three reasons put together were, let's say, 100, what part of that 100 would you allocate to each of them?
Varun Berry, Vice Chairman and Managing Director
So now, obviously, there is a slowdown as far as FMCG is concerned. ... Second, we have had a very high base. So last year, our growth was 22% in this quarter. So that also is contributing to it. Third, on the regional players, I think we wouldn't say that for the full quarter, this has been a big issue. But yes, for the first, let's say, month, month and a half, this was something that was an issue.
Answered
High priority
Cumulative price cut from peak pricing at portfolio level
Asked by Jay Doshi, Kotak Institutional Equities
Management provided a specific percentage (1.5%) for cumulative price cut.
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Question
What's the cumulative price cut that you've taken at a portfolio level from the peak pricing that you may have seen six, nine months back?
Varun Berry, Vice Chairman and Managing Director
Venkat, would you have some number for that? 2.5%? 1.5. So about 1.5%, I would say.
Evasive
High priority
Whether 42.5-43% gross margin is new normal or will be reduced
Asked by Jay Doshi, Kotak Institutional Equities
Management declined to provide a clear outlook on gross margin trajectory, citing no guidance.
refused to give guidancevague answer
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Question
So do you expect that for the category and for Britannia, gross margins of 42.5%-43% is a new normal gross margin? Or you have intention of sort of taking it down to somewhere midway between 40% where it was pre-pandemic and 42.5%, 43% where it is right now?
Varun Berry, Vice Chairman and Managing Director
No, that's a very tough question. ... I would say, first of all, we don't give a guidance. So I won't be able to tell you where we are headed. But I would say that it's reasonable to assume that we'll be somewhere around what you see as our margins.
Quantitative claims vs filed numbers
| Claim | Management said | Filing | Verdict |
|---|---|---|---|
| Volume growth flat at about 20 bps | 0.2% | 1% | Matches filing |
Filed figures sourced from Screener.in. Claims within a small tolerance of the filing are marked “matches filing”.