Britannia's Q3 Performance: A Mixed Bag of Growth and Challenges
Britannia Industries Ltd reported consolidated revenue of ₹4,885 crore for the December quarter (Q3FY26), marking a 9.5% year-on-year increase. This growth was largely in line with market expectations, driven by a balanced mix of volume and realization improvements. The company benefited from a strategic increase in grammage for its ₹5 and ₹10 packs following the Goods and Services Tax (GST) rate reduction in September 2025.
According to new MD & CEO Rakshit Hargave, sales growth accelerated to around 12% in November and December, indicating a recovery from GST transition-related disruptions in October. While the biscuit segment posted high single-digit growth, adjacency categories such as cakes, rusks, croissants, and wafers outperformed with double-digit expansion.
GST Boost: A Short-Term Lever with Long-Term Implications
Analysts from Motilal Oswal Financial Services note that Britannia is well-positioned to capitalize on the GST revision, given that 60–65% of its portfolio consists of low unit price packs. However, they caution that this GST-led volume push is temporary. For sustained growth, the company must navigate heightened competition from regional players, particularly in eastern India.
During the quarter, competitors reduced prices of ₹5/₹10 packs to ₹4.5/₹9, but Britannia opted to increase grammage instead. This led to some revenue loss due to pricing and pack-size confusion, though the industry is now expected to fully transition to higher grammage packs at standard prices. To counter regional threats, Britannia plans to ramp up media spending, strengthen branding, and innovate with new flavors and formats. The appointment of a new chief marketing officer aims to sharpen focus on branding, previously managed across separate verticals.
E-Commerce and Quick Commerce: Structural Growth Engines
E-commerce and quick commerce are emerging as critical drivers for Britannia's future. Currently, e-commerce contributes a high single-digit share to revenues, projected to rise to the early teens by FY27. With only about 20% of biscuit consumers active on e-commerce platforms, there is significant untapped potential for online growth.
Notably, adjacency categories benefit disproportionately from e-commerce, with contributions about three times higher than biscuits. These categories align well with impulse and indulgence purchases, thriving on quick commerce platforms. As adjacencies grow, they could enhance margins due to their premium positioning compared to basic biscuits.
Margin Outlook and Valuation Concerns
Britannia's near-term margin outlook appears comfortable, supported by easing input costs for materials like flour, cocoa, and palm oil. Combined with the lagged impact of prior price hikes, this helped lift Ebitda margins to 18.3% in Q3FY26, up from approximately 17% a year ago.
However, the company does not plan to maximize margins in the short term, opting instead to reinvest gains into brand building, new product launches, and digital initiatives. This strategy may limit sharp margin expansion. Over the past year, Britannia's stock has gained around 25%, trading at about 51 times FY27 earnings. While efforts to tackle competition and scale adjacencies support growth, current valuations already reflect much of the optimism, posing a challenge for future returns.
