Britannia Q3FY22 Preview: FMCG major likely to report muted results; PAT, Margins may see a dip YoY

The fast-moving consumer goods (FMCG) major Britannia Industries Limited is likely to report muted third quarter earnings for the financial year 2021-22 (Q3FY22) on Friday. The majority of the analysts see the bottom line and margins of the company contracting, while top line may grow marginally on a year-on-year basis. 

Brokerage firm Motilal Oswal sees adjusted PAT (profit after tax) for Q3FY22 to decline by almost 14 per cent to Rs 390 crore as compared to Rs 450 crore in a year ago quarter. While the net sales may by 11 per cent YoY to Rs 3510 crore from Rs 3170 crore in Q3FY21. 

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Motilal expects 6 per cent volume growth in the base business in Q3FY22 and a sharp decline in GM likely due to inflation in key RM, while EM to sustain in the mid-teens on cost-saving initiatives.  

Similarly, Axis Securities also expects the profit to dip by 16.4 per cent to Rs 378 crore and revenue may surge marginally by 7 per cent to Rs 3324 crore in October-December quarter YoY. 

Expect 3 per cent/ volume/price led growth in Q3FY22 owing to deceleration in home consumption trend and grammage reduction, Axis Securities said in earnings preview, adding further that GMs to contract 410 bps YoY amid rise in costs for agri-commodities and packaging costs.  

However, on the QoQ basis, it should improve by 50bps owing to price hikes and grammage reductions, it added. Key monitorables as per Axis include demand environment; RM cost outlook; Market share trends; Update on core biscuits portfolio and adjacencies and Update on ICDs. 

While another domestic brokerage firm ShareKhan also estimates the contraction in PAT by over 20 per cent to Rs 361 crore and around 7 per cent growth in revenue YoY to Rs 3382 crore in Q3FY22. 

The brokerage said, “Most consumer goods sector will be affected by slowdown in the domestic demand environment (especially in rural markets) and sustained raw-material inflation affecting revenue and profitability of companies under coverage.” 

All the three brokerage houses see the margins under pressure slipping between 350-370 basis points to 15-16 per cent in Q3FY22 as compared to 19.8 per cent in Q3FY21.