Britannia Industries Ltd witnessed a significant market reaction on Tuesday as its shares tumbled following the sudden departure of its top executive. The board of the renowned biscuit and dairy products company accepted the immediate resignation of Varun Berry from his positions as vice-chairman, managing director, and chief executive officer on November 10.
Leadership Transition Sparks Investor Concern
The immediate aftermath of this leadership change saw Britannia Industries shares fall by as much as 6.7% during Tuesday's trading session, reflecting investor anxiety about the company's future direction. This sharp decline underscores the market's recognition of Berry's substantial contributions to the company during his tenure.
In response to this development, the board has moved quickly to ensure leadership continuity by appointing Rakshit Hargave as the new managing director and chief executive officer, effective from December 15. Hargave brings considerable experience from the consumer goods sector, having previously served as CEO of Birla Opus and holding significant positions at prominent companies including Beiersdorf (makers of Nivea) and Hindustan Unilever Ltd.
Varun Berry's Transformative Legacy
Analysts from Motilal Oswal Financial Services highlighted the remarkable transformation Britannia underwent during Berry's leadership from FY13 to FY25. Before his tenure, the company was often perceived as a commodity business with weak operating margins, but this profile changed dramatically under his guidance.
The financial metrics tell a compelling story of growth and improvement. During Berry's leadership period, Britannia's consolidated Ebitda margin expanded by an impressive 1,100 basis points to reach 18%, while the profit-after-tax margin increased by 800 basis points to 12%. The company demonstrated robust performance across key indicators, with revenue, Ebitda, PAT, and market capitalization growing at compounded annual rates of 10%, 18%, 20%, and 25%, respectively, from FY13 to FY25.
Challenges and Opportunities for the New Leadership
Motilal Oswal Financial Services emphasized in their November 10 report that the focus will now shift to the new CEO and his strategic vision. The brokerage firm noted that growth recovery will be a key monitorable in the near term as Hargave takes the helm.
This leadership transition comes at a time when Britannia's near-term prospects show encouraging signs. The company's September quarter results (Q2FY26), released last week, exceeded expectations on profitability. Despite facing transitional challenges related to GST rate changes that limited total operating revenue growth to 3.7% year-on-year (reaching ₹4,840 crore), the company delivered a 22% year-on-year increase in Ebitda.
The quarter also marked a positive turning point for margins, with Ebitda margin expanding by 293 basis points to 19.7% - the first year-on-year improvement after four consecutive quarters of decline. This improvement was supported by better gross margins and reduced staff costs and other expenses.
According to analysts at Nomura Research, Britannia has implemented strategic pricing adjustments that could support future volume growth. The company has reduced prices on large packs and increased grammage in small packs (scheduled to hit the market from mid-November) to pass on benefits from GST changes. Given that approximately 65% of Britannia's portfolio consists of low unit packs (₹5/10), these measures are expected to help drive volume growth recovery after a relatively subdued performance in the second quarter.
As Rakshit Hargave prepares to assume leadership on December 15, all eyes will be on how he navigates the company through evolving market conditions while building upon the strong foundation established during Varun Berry's transformative tenure.
