Britannia needs steady volumes

Britannia Industries Ltd's volume recovery in the December quarter (Q3FY24) has been quicker than anticipated. Volume growth is estimated at around 5.0-5.5% year-on-year in the quarter. For perspective, in the three prior quarters, volume growth was in the range of 0-2%. The management's outlook on volumes is bright and it aspires to achieve high single-digit or double-digit growth over the medium term.

- Vineetha Sampath & Pallavi Pengonda

Investors were pleased, and the stock closed 1.4% up on Wednesday, a day when the benchmark Nifty 50 rose marginally. But the pace of volume growth from here on needs to be tracked. Britannia noted that consumption in rural areas was still subdued, although its focus states outperformed other regions in growth. This was helped by the company's efforts to expand its direct reach and accelerate its rural journey. Britannia partnered with 29,000 rural distributors in Q3.

While this augurs well, a good share of volume-growth benefits in Q3 vanished due to weak pricing. The company cut prices, leading to a 4% year-onyear drop in prices. Thus, Britannia's consolidated operating revenue (excluding other operating revenue) grew by only 2.2%, slower than volumes.