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Biscuit maker Britannia Industries’ tussle with input-cost inflation continues despite pricing action. Going by the September quarter (Q2FY27) management commentary, a near-term respite is not in sight, given dearer raw materials such as sugar, refined palm oil, flour and industrial fuel.
Britannia took a nearly 3.5% price hike in Q2 through grammage cuts, which covered only part of the impact of cost inflation. Consequently, consolidated gross margin fell by around 200 basis points (bps) year-on-year and sequentially to 39.6%. Ebitda margin declined around 150 bps year-on-year to 18.3%. True, the recent fall in palm oil prices and a cut in edible oil duties could support margins in H2FY27. But for now, some brokerages have lowered their FY27 earnings estimates.
A large part of Britannia’s portfolio sells at ₹5 and ₹10 price points, where grammage cuts take about two months to reach the market. Further pricing actions are on the cards, although additional grammage cuts could weigh on volume growth. Volumes rose 13% in Q2, largely aided by improving rural demand and a recovery in the general trade (GT) channel.
GT growth is now 2.6 times the pace seen in FY26, up from 1.5 times in Q1. Key states, which account for more than 50% of domestic sales, grew at 2.8 times their FY26 pace, while other channels grew at 1.8 times the rate of GT, aided by semi-urban and rural consumption.
Systematix Shares and Stocks (India) notes that while Britannia’s expected market-share recovery on retail shelves, with the odd-MRP-pack advantage enjoyed by competitors subsiding, is encouraging, volume growth remains moderate. The two-year compound annual growth rate (CAGR) is estimated at 4.5%, with the added overhang of upcoming grammage cuts across around 60% of the portfolio.
Recall that following the GST hike, Parle and other competitors continued with packs priced at ₹4.5 and ₹8.9 to gain market share.
Moreover, Reliance Consumer Products has launched biscuits similar to Britannia’s existing offerings, entering Tamil Nadu, a key market for the company.
So far in 2026, Britannia’s stock is down 20%. It trades at a FY28 price-to-earnings multiple of 38, according to Bloomberg data. But moderated valuations are not enticing enough amid concerns over margin recovery.
Harsha Jethmalani is a Deputy Editor at Mint with over a decade of experience covering stock markets and corporate India. As a key member of the Mark to Market team, she specializes in delivering cutting-edge commentary on market trends, the economy, and corporate financial reports.<br><br>Born and raised in Mumbai, Harsha’s entry into business journalism was a serendipitous pivot. Graduating during the 2008–2009 financial crisis, her initial goal of becoming a research analyst at an MNC was rerouted. However, what began as a chance career move quickly became a conscious choice; she discovered that financial journalism is a powerful storytelling tool capable of influencing and empowering the financial decisions of a massive audience.<br><br>Harsha began her career in 2009 at IRIS Business Services (Myiris.com), tracking mutual funds and interviewing fund managers. In 2011, she joined the Network18 Group, writing extensively on equity market trends for Moneycontrol.com and hosting pre- and post-market audio updates. Following a stint covering personal finance at Dalal Times, she joined Mint in 2016 as a Content Producer, steadily rising through the ranks to her current editorial position.<br><br>A defining highlight of her tenure at Mint was her extensive coverage of India's historic Goods and Services Tax (GST) reform. She chronicled the massive indirect tax overhaul from its initial conceptual and execution hurdles to its eventual streamlining. Her impactful reporting earned official recognition when her article exposing a spike in gold smuggling ahead of the GST rollout was formally acknowledged by the Office of the Director General of Audit (Central), Kolkata. Currently, Harsha closely tracks the IT, cement, real estate, and paint sectors. Her sharp news sense and ability to spot emerging trends consistently bring fresh, actionable perspectives to market analysis.<br><br>She holds a postgraduate degree in financial markets from Indira Gandhi National Open University and a Bachelor of Management Studies from Vivekanand Education Society, Chembur, Mumbai.
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