Britannia to Raise Prices as Inflationary Pressures Mount Amid Middle East Conflict

Britannia Industries to Implement Price Hikes and Grammage Cuts Amid Rising Costs

Britannia Industries, the country's largest biscuit manufacturer, will implement selective price hikes and grammage cuts this quarter to shield its margins from rising costs of palm oil, laminates, fuel, and freight linked to the West Asia conflict. In a post-earnings call with analysts on May 8, managing director and chief executive officer Rakshit Hargave announced the company's plan to mitigate the impact of rising costs.

Britannia reported a 21 percent rise in consolidated Q4 net profit, with revenue growing 7.1 percent to Rs 4,686 crore. However, the company's EBITDA (Earnings before interest, taxes, depreciation, and amortisation) margin came in at 18.2 percent, down 20 basis points year-on-year (YoY) and 186 basis points sequentially. The company's shares fell 4.18 percent to Rs 5,571 on the NSE as of 11:11 AM on May 8.

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The company has initiated calibrated price increases starting from this quarter, with some packs above Rs 10 to see a price increase. Hargave stated that even with the small increase in price, the demand situation will remain fairly strong. Britannia reported higher inflation in palm oil, laminates, and fuel costs, whereas wheat followed a deflationary trend.

Britannia Remains Unaffected by West Asia Conflict

Domestic operations remained unaffected by fuel and gas shortage concerns from the West Asia conflict. However, the company noted that it has secured forward contracts for the next five months, protecting it from immediate palm oil volatility. Hargave stated that broader inflationary pressures are forcing the company to take mitigation measures.

Impact on Exports

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The company's international business revenue and profitability were impacted during the last quarter due to vessel unavailability and demand slowdown in those markets. Hargave announced that the company will hike prices in the international markets from Q1 FY27 and optimise sourcing between India and overseas manufacturing facilities. Full operations are expected by mid-May.

Dual Pricing Disruption

The "dual pricing" disruption during the GST transition mainly impacted Britannia's B2B wholesale and rural channels, which contribute around 25 percent to the company's business. The issue was particularly significant because nearly 60-65 percent of Britannia's biscuit portfolio is sold at the highly competitive Rs 5 and Rs 10 price points. However, the company remains confident that volumes will normalise as competitors move back to the standard Rs 5 and Rs 10 pricing.