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BRITANNIA INDUSTRIES LTD. - 500825 - Closure of Trading Window

 This is to inform you that in terms of the Company''s Code of Conduct to Regulate, Monitor and Report Trading by Insiders & Designated Persons, the trading window in respect of the Company's securities will remain closed with effect from 1st January, 2022, for designated persons, their immediate relatives and the persons with whom they have material financial relationship. The trading window shall open after 48 hours of declaration of unaudited financial results of the Company for the quarter and nine-months ended 31st December, 2021.
30-12-2021

Britannia unveils new identity for Good Day brand

 Britannia has rolled out a high decibel media plan to announce the new identity. The communication will be channelled through print, TV, social media and outdoor
21-12-2021
Bigul

Britannia Industries to invest 621 crore under the PLI scheme

 Revamps its leading brand Good Day with new brand identity
17-12-2021

Britannia revamps biscuit brand Good Day, to add three more variants

 Britannia will launch Good Day Harmony and two other variants in the premium segment
16-12-2021

The ‘Tiger’ gets ready to fight back

 Unprecedented raw material inflation hit Britannia Industries’ September 2021 quarter performance. Its stock slipped 5% after Q2FY22 results announcement as India’s largest biscuit maker reported 23% YoY fall in net profit (Rs 384 crore) and its operating margin fell to 15.5% contracting by more than 400 basis points YoY. As inflation plays spoil-sport not only with the Indian economy but also the global economy as a whole, fast-moving consumer goods (FMCG) companies are increasing prices across all product categories as they battle rising costs. In the biscuit market, market leader Britannia resorted to a 4% price hike in Q2FY22. Close competitor Parle Products soon followed suit. But will these food majors be able to retain consumers battling lower income levels and inflationary rise in household expenses? Britannia Industries faces the uphill task of driving growth amid high input costs, slowing rural growth, and consumers shifting to lower-priced competitive brands. With this backdrop, will Britannia’s ‘Total Foods Company’ agenda be pushed to the backburner? Quick Takes Britannia aims to overcome raw material price inflation through a 10% price increase spread over the next three quarters The company actioned a one third price increase, through maximum retail price (MRP) hike and two thirds through grammage reduction It is difficult for companies to hike prices of lower-priced packs (LUPs) to avoid downtrading (consumers shifting to lower-priced products) Operating margins were impacted by high crude and palm oil prices in Q2FY22 and fell by 420 basis points YoY Britannia’s rural market share gains were 2.5x that of urban in Q2FY22 Mixed September 2021 quarter Britannia’s reported revenues in Q2FY22 were Rs 3,607 crore, a 5.5% YoY rise. While revenue growth was healthy on a high double-digit base of Q2FY21, investors were disappointed with steep operating margin contraction and double-digit net profit fall. The operating margin came in at 15.5% in the September 2021 quarter compared to 19.7%, a year ago. More than four percentage points fall in margins was due to a high increase in raw material costs like palm oil and milk. Crude inflation led to higher prices of packing material like laminates and corrugated boxes and high transportation costs in Q2FY22. Higher interest costs (up 31% YoY) also contributed to the 23% fall in net profit during the quarter. Net profits came in at Rs 384 crore in Q2FY21 compared to Rs 498 crore a year ago. Inflation dents margins, palm oil prices to remain elevated in the near term The easing of Covid-19 lockdowns by the end of 2020 coincided with rising inflation. Pent-up demand, supply chain disruptions, and expansionary monetary policies followed by central banks across the globe to soothe pandemic tremors stoked high commodity price inflation. The rise in prices of agricultural produce, copper, iron ore, zinc, aluminum, and crude pushed the prices of products consumed by the general public higher. The US Federal Reserve and Bank of England are struggling to keep inflation within their targets of 2% with inflation of 6% and 4.6%, respectively. In India, wholesale inflation and consumer price inflation came in at 12.5% and 4.5%, respectively, in October 2021. High wholesale inflation translating into high retail/consumer price inflation is not far off, as companies will pass on high input costs to their customers. While high input costs impact the bottom-line of companies, consumers are also battling high fuel costs and increased household expenses. The top Indian FMCG pack, Hindustan Unilever, Dabur, Marico, Britannia, all saw a contraction in operating margins on a YoY basis in Q2FY22 due to higher crude prices and rising raw material costs. For Britannia, cost inflation is driven by four main commodities, sugar, flour, palm oil, and crude. The company was able to control sugar and flour price inflation impact through forward purchases. Milk prices were up 15% YoY in Q2FY22. But it is palm oil and crude that are major pain points for Britannia. Crude prices increased by more than 40% over the past year, and palm oil prices rose around 54% YoY for the industry as a whole. In addition to industrial fuel inflation which was 35% YoY for the company in the September 2021 quarter, higher crude prices also led to the cost of laminates and corrugated boxes rising by 19% and 46% YoY, respectively, in Q2FY22. For Britannia, palm oil cost inflation is lower than the industry at around 46% YoY, supported by forward buying. High palm oil inflation is due to disruption in supply chains owing to the Covid-19 pandemic in major palm oil-exporting countries, Indonesia and Malaysia, amid high global demand. India imports roughly 8-10 million metric tonnes of palm oil annually. Palm oil has a longer shelf life and is cheaper compared to other edible oils like soybean and sunflower. Used in industrial baking, palm oil is also used by foodservice and hotel industry due to its ability to remain stable at high temperatures. With Covid-19 cases rising again and Malaysia seeing labour shortage, palm oil prices are expected to remain elevated in the near term. Speaking on inflation impact, Varun Berry, Managing Director at Britannia Industries said, “The cumulative inflation (absolute YoY cost increase) in the last six years is less than what we have seen this year in 2021. So, that's the quantum of inflation that we are facing.” He further added that annualised inflation is around Rs 1,300 crore for Britannia in FY22, which will be adequately covered by Q4FY22 through price increases. No substitute for price rise, volume growth will be low In an environment like this, there is no other way but to raise the prices of products, Berry said. Britannia plans to increase prices to the tune of 10% by Q4FY22. One-third of the price increase is through a direct increase in sticker price, and while the remaining two-thirds through grammage reduction. The FMCG sector is driven by fixed price low unit price packs (LUPs) such as Rs 5, Rs 10, Rs 20, and so on. LUP packs of Rs 5 and Rs 10 make up nearly 60-65% of the entire biscuit market. It is difficult to increase the prices of such LUP packs, which may lead to consumers shifting to competitor brands or unorganised markets. Thus, to manage inflation impact, companies resort to grammage/volume reduction while protecting the price points. According to Britannia’s management, while an increase in sticker price can be implemented in a short span of time, grammage reduction is done after undertaking trials with respect to package size or size of products like cake, biscuit, chips, etc. Grammage reduction also takes time to roll out as the shelf life of the product needs to be tested. Thus, the benefits of Britannia’s entire price increase exercise will be visible only by the March 2022 quarter. While grammage reduction will lead to lower volume growth for Britannia, sales growth will be healthy in the coming quarters. Britannia to equalize rural-urban share, innovation agenda on the forefront According to a recent Nielsen report, rural growth is slowing as high prices squeeze household budgets. Higher fuel prices and increase in mobility as the public at large returns to pre-pandemic routines also increased monthly expenditures. But rural India’s resilience in the first wave vis-a-vis the second wave’s deep impact makes rural growth optically lower in the July-September 2021 period. Urban India on the other hand is in better shape as modern trade returned strongly for the FMCG sector from July 2021. According to Britannia management, modern trade revenue increased 10% YoY compared to other channels in Q2FY22. While Hindustan Unilever flagged slower rural growth in its September 2021 quarter conference call, Britannia, similar to FMCG peer Dabur, believes that rural India is still very resilient. Speaking on rural growth, Berry said, “we have seen very good growth in rural areas. It's more about our ability to reach the villages and distribute our products. So, we continue to be bullish as far as rural is concerned.” The company is rapidly increasing its rural distributors which now stand at 25,000. Growth in India’s biggest rural market, the Hindi heartland - Uttar Pradesh, Bihar, Madhya Pradesh, Rajasthan - is 33% higher compared to Britannia’s country average in H1FY22. According to the management, Britannia’s rural market share gains are 2.5 times higher compared to the urban market in Q2FY22. The company also aims to increase its rural revenue share to 50% over the next three years, which is around 30-35%. The company is also aggressively looking at non-biscuit portfolio expansion and prioritizing innovation. Britannia’s innovation products, mostly on-the-go products, were impacted by the pandemic. The company recently launched Potazos (salty snacks) and Treat Wafer Stix across the country in Q2FY22. Marble Cake introduced in Eastern India in September 2021 quarter will shortly expand pan-India. The company’s much-awaited product, croissants, will be launched in the next three months. FMCG sales fell in double-digits in November due to the high base effect of the same period last year and high cost inflation. With the economy recovering and rebound in mobility, packaged food witnessed the lowest fall of just 2%. Investors are watching how well Britannia can overcome raw material inflation through price increases and maintain its lead over Parle Products, which narrowed significantly during the pandemic.
13-12-2021
Bigul

BRITANNIA INDUSTRIES LTD. - 500825 - Compliances-Reg. 39 (3) - Details of Loss of Certificate / Duplicate Certificate

 Intimation regarding Issue of Duplicate Share Certificate under Regulation 39(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
10-12-2021
Bigul

BRITANNIA INDUSTRIES LTD. - 500825 - Compliances-Reg. 39 (3) - Details of Loss of Certificate / Duplicate Certificate

 The intimation is hereby given pursuant to Regulation 39(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, regarding the issue of duplicate share certificates.
07-12-2021

Here's why Mehul Kothari recommends buying Britannia, HDFC Bank

 According to the technical analyst from Anand Rathi, Britannia is hovering near its 200 DSMA support which also coincides with the ICHIMOKU cloud on the weekly scale, thus the downside seems marginal
30-11-2021

Britannia Industries rural business contribution may rise 50% in 3 years

 The country's largest biscuit-maker Britannia Industries rural focus remains intact and company's rural revenue may touch 50 per cent in the next three years amid a gradual rebound in urban demand.
14-11-2021
Bigul

Britannia Industries Ltd - 500825 - Statement Of The Utilization Of Issue Proceeds Of Non-Convertible Securities Under Regulation 52(7)

 Pursuant to Regulation 52(7) & (7A) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, we hereby confirm that the issue proceeds of the non-convertible securities have been fully utilized without any material deviation.
13-11-2021
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