Shares of Britannia Industries have drawn mixed reactions from brokerages after the company posted its Q1FY26 results. While revenue growth was largely in line with estimates, a sharp decline in gross and EBITDA margins led to caution among analysts. Consumption trends showed early signs of improvement, but cost pressures and muted volume growth kept earnings in check.
CLSA on Britannia share: Outperform, TP ₹5,973
CLSA maintained its ‘Outperform’ rating on Britannia despite a mixed quarterly show. The brokerage noted that consolidated revenue rose 9% YoY, in line with expectations, while the standalone business also posted a 9.8% YoY growth. However, gross margin contracted by 310bps YoY and remained flat sequentially at 40.3%. EBITDA margin came in at 16.4%, down 136bps YoY and around 80bps below CLSA’s forecast.
Absolute EBITDA was 5% below estimates, primarily due to higher employee expenses. Britannia also noted a marginal consumption uptick in both rural and urban markets, while PAT growth was flattish YoY.
Nomura on Britannia share: Neutral, TP ₹5,875
Nomura termed the Q1 results as weaker than expected, estimating volume growth at just 2% YoY, which fell short of its forecast of 4.5%. Gross profit margin (GPM) contracted by 310bps YoY (up 20bps QoQ) to 40.3%, slightly below Nomura’s expectation of 40.8%. EBITDA growth was flat YoY, reflecting weak operating leverage.
Morgan Stanley on Britannia share: Equal-weight, TP ₹5,511
Morgan Stanley remained cautious, retaining an ‘Equal-weight’ stance. It reported that consolidated revenue, EBITDA, and adjusted PAT grew by 10%, 0%, and -2% YoY, respectively. These figures were also below its own estimates by 1%, 7%, and 8%, respectively.
Gross margin fell to 39.2%, down 260bps YoY and below MS’s estimate of 40.5%. EBITDA margin of 16.7% was the lowest in 11 quarters, down 155bps YoY, and missed MS’s estimate of 17.8%.
The management indicated it would continue focusing on brand investments and product innovation, while navigating margin pressures due to rising competition.
Disclaimer: The views and investment recommendations expressed by brokerages are their own and do not represent the views of this publication. Investors are advised to consult certified financial advisors before making any investment decisions.
