Britannia Jumps on 14% Profit Surge; Nomura Reiterates 'Buy', Predicts Over 20% Upside

Britannia Jumps on 14% Profit Surge; Nomura Reiterates 'Buy', Predicts Over 20% Upside​

Britannia Industries witnessed a significant rally, climbing sharply after reporting strong consolidated net profit growth for the June quarter. The company's stock surged over 4 percent in an otherwise subdued market following its Q1 results announcement. Global brokerage firm Nomura retained its positive stance on the stock, maintaining a 'Buy' rating and setting a target price of Rs 6,500 per share.

The scrip hit an intra-day high of Rs 5,660 on the NSE before consolidating some gains, trading at Rs 5,592 during the morning session, up 3.48 percent. The results underscore the company's ability to navigate challenging market conditions while delivering substantial growth.

Q1 Earnings Boost Driven by Net Profit Rise​

Britannia reported a consolidated net profit increase of 14.08 per cent for the June quarter of FY27. This translates to Rs 593.38 crore, significantly up from the Rs 520.13 crore posted in the corresponding quarter of the previous fiscal year. Revenue from the sale of products rose by 9.47 per cent to reach Rs 4,964.37 crore.

Operating revenue saw an increase of 8.17 per cent during the period, standing at Rs 4,999.97 crore. The impressive performance was attributed to higher volumes and effective price increases implemented across domestic and international operations.

Analyst View: Nomura Appraises Growth Amid Challenges​

Nomura maintained its 'Buy' rating on Britannia Industries, projecting a substantial upside potential exceeding 20 per cent from the previous closing price, based on their target of Rs 6,500 per share. The brokerage noted that while sales were generally in line with estimates, EBITDA was marginally below expectations due to increased advertisement spending by the company.

Nomura commentary highlighted that management's outlook remained positive, noting that Britannia exited the quarter achieving mid-teens revenue growth. This strong trajectory is supported by continued product innovation and a robust regionalisation strategy.

Business Performance and Operational Highlights​

Consolidated sales grew 9.5 per cent year-on-year (YoY). However, consolidated revenue rose 8.2 per cent YoY to Rs 5,000 crore, which was impacted by a substantial 59 per cent decline in other operating income, attributed to lower state fiscal incentive entitlements.

The firm achieved healthy volume growth of 6-7 per cent YoY, coupled with pricing growth remaining in the low single digits. This success includes gaining market share through scale-up in e-commerce and strong growth in general trade channels.

CEO Insights: Navigating Global Supply Chain Issues​

Managing Director and Chief Executive Officer Rakshit Hargave addressed the difficult quarter, noting that it began amidst the West Asia conflict. This geopolitical event led to a sharp rise in fuel costs and freight charges across both domestic and international operations.

Despite these challenges, Hargave stated that the company successfully navigated the period, delivering healthy volume and value growth. He also confirmed that the international business sequentially recovered towards the latter part of the quarter as supply chain constraints began easing.

Future Outlook and Valuation Targets​

Nomura is expected Britannia to deliver an earnings per share compound annual growth rate (CAGR) of 13 per cent between FY26 and FY29. The brokerage continues to value the stock at 50 times its March 2028 estimated earnings.

The report noted that while the company's performance is strong, potential downside risks include lower-than-expected volume growth and margin pressure. It also mentioned the successful launch of the Dubai Kunafa Croissant during the quarter, supporting brand expansion.