Britannia Industries Limited (NSE: BRITANNIA) Q1 2026 Earnings Call dated Aug. 06, 2025
Corporate Participants:
Ayush Agarwal — Investor Relations
Varun Berry — Executive Vice Chairman, Managing Director and Chief Executive Officer
Manoj Balgi — Chief Manufacturing and Procurement Officer
Vipin Kumar Kataria — Chief Commercial Officer
Siddharth Gupta — General Manager – Marketing
Analysts:
Abneesh Roy — Analyst
Mihir Shah — Analyst
Nitin Gupta — Analyst
Latika Chopra — Analyst
Percy Panthaki — Analyst
Tejas Shah — Analyst
Nihal Mahesh Jham — Analyst
Amit Sachdeva — Analyst
Jaykumar Doshi — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Britannia Industries Limited Q1 FY ’26 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Ayush Agarwal, Investor Relations. Thank you. And over to you, sir.
Ayush Agarwal — Investor Relations
Thank you, Neerav. Good morning everyone. This is Ayush from the investor relations team. I welcome you all to the Britannia earnings call to discuss the financial results of Q1 ’25-’26. Joining us today on this earnings call is our Executive Vice Chairman, Managing Director and CEO, Mr. Varun Berry; Executive Director and CFO, Mr. N. Venkataraman; Chief Commercial Officer, Sales and Replenishment, Mr. Vipin Kataria; Chief Manufacturing and Procurement Officer, Mr. Manoj Balgi; General Manager, Marketing, Mr. Siddharth Gupta; and General Manager, Corporate Finance, Mr. Ramamurthy Jayaraman. The analyst deck is uploaded on our website.
Before I pass it on to Mr. Varun Berry, I would like to draw your attention to the Safe Harbor statement in the presentation. Over to Mr. Berry with the remarks on performance.
Varun Berry — Executive Vice Chairman, Managing Director and Chief Executive Officer
Good morning, everyone and welcome to the call. So let me just jump into the presentation straight away. So getting on to our agenda, I’ll quickly take you through the business overview, move on to the strategic priorities, the cost and profitability outlook, and finally, the financial results.
So the first slide of the business overview, we’ve had pretty good revenue growth. I can say that it’s double digits. It’s just about 20 basis points lower than double digits. So we’ve had a 9.8% growth, a 12-month growth and a 14.2% 24-month growth. Our profit after-tax is a 3% growth for 12 months and 14% for 24 months. Getting to the next slide, which is the commodities, as far as our market share is concerned, sorry, the market share slide. We’ve improved our market share versus our organized players. Five out of seven regions we’ve gained share. There are two regions where there’s some work to be done. And overall, while market share remain flattish from a Nielsen perspective, I think other players in the industry have not grown as fast as us. So the fact is that we seem to be doing reasonably well as far as market share is concerned. There are a few issues which we need to work out and we are working on those. But I personally think that our momentum is on our side both on revenue as well as on market share.
Getting to the commodities slide. Now on commodities we’ve had a reasonably, I would say stable quarter while on an overall basis if you look at the full year it’s been very turbulent. Flour there’s been versus Q1 of ’25 which is the corresponding quarter, last year it’s 8% inflation. Palm oil, versus sequentially it’s been negative. So we’ve had a deflation sequentially but versus the same quarter last year we’ve had an inflation of 45%. Sugar, again within those boundaries. So pretty manageable. Cocoa also sequentially has come down while there is a 35% inflation versus last year. Laminates and CBB’s both have been within those guardrails and pretty manageable.
Moving on to the strategic priorities which are what we discuss every time. Efficiencies in sales and distribution, innovation and adjacencies, sustainability, brand and cost efficiency. So I’ll take you through that. As far as distribution is concerned, we’ve seen an uptick both in urban as well as rural. Our rural growths have this quarter been double digits and urban is very high single digits. This urban includes the General Trade as well as the Modern Trade as well as the E-Comm numbers. Now what are the enablers as far as the growths are concerned?
We are focusing on our rural markets where we are looking at taking our distributors to be full scale distributors. When we started this program we had appointed rural distributors where the supervision was pretty good. But when they become full scale distributors, the supervision becomes even better and the whole working style becomes more organized. So we are looking at taking our rural distributors to be full scale distributors which is helping us.
Second, obviously there is better extraction from the existing distribution infrastructure that we’ve created. The high potential outlets are being focused on through our RTM project. And this is not just for the base business but it’s got excess focus on the adjacency business and we are seeing that pay up for us. We’ve also got the sales program for key urban accounts. We are revamping that program and that’s helping us as well. Obviously E-Commerce has been doing really well for us. We’ve been gaining share in that segment although it’s still only 4% of our overall business. Moving on to the next slide which is driving the Hindi belt. Hindi belt this quarter has been really, really good. All four states have given us very good growths, very high double-digit growths and the growths are 2.7 times what they are for our other states and this has led to a market share gain of 65 basis points over Q1 in the Hindi states. So that agenda is going quite well for us.
On the marketing program. Some very exciting marketing programs. The Good Day programs continue. We’ve had a very good campaign and that’s giving us good results. We’ve had this 50/50 program with Ravi Shastri which has been doing pretty well. The advertising has been appreciated. The connect is being made. Jim Jam continues to advertise. We’ve tied up Gukesh for Milk Bikis and that advertising is on air. We also did inclusivity campaign during the pride month where we also brought in our largest competitor into it which became quite a discussion point. And Mari Gold, the StartUp show continues and is doing very well for us.
Now coming to innovations, some very very exciting innovations. You are aware of Pure Magic Stars and the Harry Potter Pure Magic Choco Frames, the Butter Jeera Good Day and the Fruit and Nut are doing very well for us. We are just in the process of launching Pure Magic Choco Tarts. It’s just getting into the market as we speak. There are two flavors. One is the chocolate and the second is the hazelnut and these are very exciting products and we are hoping that these will become big blockbusters. We also launched 100% millet NutriChoice, a very exciting product again. It’s got no sugar, no added sugar in it and it doesn’t have palm oil. This is a very, very good product which has gone into the market and we are launching Milk Bikis Smart, which is on the whole concept of chess.
In fact the biscuit itself has the chess personalities on it and this is enriched with DHA which is a good ingredient for kids to grow up with the right thinking abilities. And as a result of all of our innovations our premium product salience has gone up by 310 basis points. This question comes up in every meeting that we have with all of you. So we thought that we’ll just preempt this and give you this number early.
The adjacency business, the next slide. The adjacency business has been doing quite well for us. Rusk has been growing double digits and high double digits and even the profitability has improved dramatically as far as Rusk is concerned. Croissant, mid-20s kind of growths and we’ve gotten to a break-even as far as profitability is concerned. After all the spends that we do on A&SP, a very good gross margins we make on this product and this is moving very well in the market. Wafers again it’s growing very well. Almost a 30% growth here and our market share has moved up. And this category also, we were late starts in this category but we are gaining strength very, very quickly.
Dairy, we’ve done extremely well in General Trade where it’s like a 40% growth. Even in E-Commerce we’ve got very good growths. We still have to get our Modern Trade agenda right because there are price players who continue to hammer on price and we are in the process of making sure that we get Modern Trade under our belt as well. As far as Drinks is concerned, every company has reported negative numbers but we’ve had — on milkshakes, we’ve had a double digit growth despite the early monsoons, etc. So that’s doing quite well for us as well.
Moving to the ESG agenda, Manoj, you want to speak on the ESG.
Manoj Balgi — Chief Manufacturing and Procurement Officer
So the progress on the ESG KPI as we track has been good this quarter. We have moved 4% in terms of our renewable electricity consumption. In terms of specific water consumption reduction, we are ahead of the target and we have had about 3.5% reduction this quarter. The diversity agenda is being driven where we have had in the women factory workforce, we have had about a 1.8% increase over the previous quarter. And through our CSR arm, the Britannia Nutrition Foundation, the number of beneficiaries that —
Varun Berry — Executive Vice Chairman, Managing Director and Chief Executive Officer
1.8% is the contribution increase, not 1.8. Yeah.
Manoj Balgi — Chief Manufacturing and Procurement Officer
And Britannia Nutrition foundation, the number of beneficiaries reached has increased by about 3.5% over the previous quarter. And we have got multiple recognitions this quarter, about we were recognized with multiple accolades for the global CSR and ESG awards for 2025. Six of our factories won the CII EHS Excellence Award and Dun & Bradstreet has recognized us as one of the leading ESG entities in India.
Varun Berry — Executive Vice Chairman, Managing Director and Chief Executive Officer
And Manoj has been leading this, you know, right from the time we started and I’m very proud of our achievements here. Obviously, a mountain to climb but a very good start as far as ESG is concerned.
Now moving on to cost and profitability. So on the cost front, sustaining margins while being competitive was our agenda and I think we’ve been able to do that quite well. We’ve been able to fight the regional players as well and we’ve been able to make sure that we keep the momentum going. Also investing behind key brands and scaling up innovations, we’ve been able to do that quite well and we are in the process of launching a lot more innovations during this year. The outlook obviously driving consumption in the core categories remains our big agenda. And closely monitoring policy interventions and the harvest output which impact the commodity prices also will be a very critical thing for us.
But having said that, I think from here on we do not see the kind of wide fluctuations that we’ve seen on commodity and we always perform much better in stable conditions. During the turbulence in commodity prices like what we’ve seen in the last two years, it’s always difficult to navigate price increases and estimate what it’s going to lead to, etc., etc., etc. We have covered most of our inflation in through our price increases. We are done with that and we are in a good position today.
Okay, moving to the financial results. So 12-month growth of 10%. I’m taking the license to call 9.8%, 10%. And if you were to look at it, it’s INR4,535 crore consolidated revenue for us during this quarter and this is not our peak quarter usually, so it’s good to see the movement here. Now getting to the next slide. I’ve taken you through it so I won’t drain this slide but a 3% growth on PAT and PBT. And even if you were to look at profit from operations almost at 15%, profit before tax at 15.5% and profit after-tax at 11.5%. So that’s where we are at. We’ve also had you know the SAR revaluation which happens which is an impact of INR52 crores to our overall profit. If you were to look at it without that the operating results are very good with a 10% top line and if you disregard the SAR for a second while you can’t do it, it would be a 13% bottom line growth.
So with that we’ll open the house for questions from you.
Questions and Answers:
Operator
Thank you very much. We will now begin with the question-and-answer session. [Operator Instructions] First question is from line of Abneesh Roy from Nuvama Wealth. Please go ahead.
Abneesh Roy
Yeah, thanks and congrats on near double digit sales growth. My first question is on the market share and overall local player dynamic. So here specific question is number three player ITC has called out in their Q1 release that biscuits has been one of the key drivers for their growth. Now, five, six years, of course, number three player has been quite rational. Is there any resurgence of the number three player? And on your comment on local players coming back, why in only two regions you faced a market share issue. Why was it restricted to two? Why not in all the seven regions? And could you clarify which are those players and which are those regions? That is my first question.
Varun Berry
Yeah, so let me answer your second part first. So the region that we’ve had a little bit of turmoil is the East. And the reason for that is not the regional players, but it’s internal restructuring of distribution that we are doing. We are looking at mega distributors. We are trying to create infrastructure for the future. And as a result of that there’s been some amount of turmoil. And that is one region where we’ve lost share and that is one region where also you tend to have a lot of local players. So I guess the local players have benefited on basically are stumbling a bit in the execution there.
But I think we’ve got things under control and we are in the process and we’ll come back. The tiger always takes two steps backwards before it launches itself. So we are in that position where we’ve taken those two steps backward and now we are in the position to launch ourselves and I think we’ll come back much stronger there. And so that’s one reason for — what was the other question, Abneesh?
Abneesh Roy
The number three player, ITC.
Varun Berry
No, no, ITC has been very, very rational actually. We have no complaints with any one of our competitors. It’s been a very, very good ride as far as competition is concerned. There’s nothing dirty happening anywhere. All of our competitors have been playing the game as it should be played, which is on brands, which is on distribution. So no, they’ve been very good. And there’s nothing which is looking out of whack. I don’t think there’s, you know, their shares are within that band and it continues to be there.
Abneesh Roy
Varun two quick follow ups on this first question. These are small follow ups. One is the mega distribution which you are doing, obviously that is being done for some reason. So is my assumption correct that long term they should drive margin profile better? And this is a transition issue. And on your comment on alternate deflation/inflation comment, generally when this happens in any category, the number one player suffers. So would you say that this issue of inflation followed by deflation and vice versa, that impact on you from a demand side is not something you are too much worried on.
Varun Berry
No, we are not worried on. While we were in that cycle we were worried. I think now we are in stable territory. So we are not worried on. The reason for doing the mega distributor is to get better control on our distribution. Making sure that we have to deal with one mega entity and make sure that we put in the right processes. And it is a fragmented region with, you know, there were a lot of distributors. So we are trying to just restructure it and see how we can take it to the next level.
Abneesh Roy
So my last question is on the adjacency business. So in croissant and wafers, have you now become the number one player already? And in dairy, the 40% growth in GT, is that a base effect issue? What is the sustainable growth here?
Varun Berry
No, the sustainable growth there is, as far as GT is concerned, I think we can continue to get that kind of growth for a number of years because with our now being price competitive there is a long — we can get that GT business to do a lot better than what it’s done in the past because we were at a 25%, 30% premium to our largest competitor. So I think that will continue. The contribution of GT to our overall cheese will continue to grow. But that doesn’t preclude us from making sure that we get our other channels right. And that’s what we are working on currently.
Abneesh Roy
Thanks. That’s all from me. Thank you.
Operator
Thank you. Next question is from the line of Mihir Shah from Nomura. Please go ahead.
Mihir Shah
Hi Mr. Berry and team. Thank you for taking my question. So firstly on the volume growth, it seems to be just about 2% volume growth and the momentum versus what we saw in the fourth quarter seems to have gone down. While most of the other consumer companies are seeing an improvement in momentum when it comes to volume growth from 4Q to 1Q, is there any impact of this east distribution rejig that you’re doing is impacting this volume growth? That’s one. And the other one is do you see any green shoots or trend change for volume growth trajectory to get better in the coming quarters?
Varun Berry
No. See the point is that with the kind of inflation that we’ve seen, there is bound to be revenue growth more than volume growth in these times.
Operator
I request to mute your line from your side please when you’re not talking. Sorry sir, please go ahead.
Varun Berry
Yeah, so there is bound to be volume will give way for revenue and that’s what we are seeing. However, the way to look at it in our business because 60% of our business comes out of price packs which are INR5 and INR10. The way to look at it is to see what kind of transaction growth, how many consumers are interacting with our brands. And the transaction growth has been 12%. So we are pretty happy with our transaction growth of 12%. And volume will also come back slowly and steadily. But I would say the delta between volume and revenue will remain at about 6%, 7%, 8% for the coming two or three quarters.
Mihir Shah
Understood. So thank you for that. So second question is on the commodities. Sequentially most commodity prices are seeing a downward trend and there seems to be kind of a 7.5%, 8% pricing in the system. How should one think about the gross margin from here on? Because in 1Q we did not see much improvement on a sequential basis versus what you were expecting. But maybe there were some higher inventory the system. Can one expect this gross margins to have bottomed out and to see an improvement and all the high price inventory have gotten exhausted?
Varun Berry
No, it was not about high price inventory. In Q1 the inflation that we saw was still what we had seen in the previous quarters and we hadn’t been able to mitigate that inflation through the required price increases. Now we’ve completed that and you actually answered your own question. If you know the commodity prices are within a band then obviously the margins can only be better.
Mihir Shah
Got it. Just wanted to get your confirmation on the same and just a shout out to your innovations especially on the chess and the Harry Potter ones. They’re just pretty awesome. And that’s all from my side. All the wishing you all the very very best. Thank you.
Varun Berry
Thank you, Mihir.
Operator
Thank you. Next question is from the line of Avi Mehta from Macquarie Capital. The line for the participant dropped. Next question is from the line of Nitin from Emkay Global. Please go ahead.
Nitin Gupta
Hi sir, thanks for the opportunity. I just wanted to check on this SAR sort of impact of INR52 crores. How exactly is the calculation and how should we build this going forward in the coming quarters?
Varun Berry
See it’s completely dependent on the stock price. The employees get this SAR which then gets revalued basis the stock price. So — but we do understand the fluctuation it causes and in the next year, not in this year but in the next year we’ll try and see how we can even it out better.
Nitin Gupta
Okay, sure. Thank you. And my second question is around how are we investing behind brands? Because last year A&P spendings have reduced 19%. So can you throw some light here? And also if you can help me understand how is our digital spend?
Varun Berry
So we did rationalize our A&P spends during this quarter. What we did was we focused on our IPL. IPL was our main platform where we — and it was also on digital. So digital has been a pretty important agenda for us. And we just focused on IPL because this was the IPL quarter and that gave us the right kind of dividends. Obviously we knew that the inflation pressures are there. So I think that strategy worked. We didn’t go across all our brands. We just focused on our top four brands and advertised those brands. So that’s how we moved on. But in this quarter, we are back to our normal A&P spends.
Nitin Gupta
Thank you, sir. And last question is around quick commerce. What is the premiums of quick commerce given 4% is from E-Commerce. And we have exciting offerings like Fox Nuts, Be You Protein Bars and Croissant. So how exactly is quick commerce doing for us?
Varun Berry
So overall it is 4%, on our overall business. Obviously for certain categories it’s larger. Actually biscuits is the lowest and the other categories are all 8% plus. So but the fact. And you know, between quick commerce and E-Commerce, I think it’s mainly quick commerce.
Vipin Kumar Kataria
Yeah. So. Hi, this is Vipin Kataria. So out of our total digital comm business, almost 75% now is coming from Q-Comm. The category also is pretty salient in Q-Comm. So that is how the entire ratio is changing. Marketplace for us is not very big because the average order value for us is not very big. So therefore the big tailwind is coming from Q-Comm. Now coming to lot of the innovations that we have launched. So like Croissant, almost 35% of the sale is coming from E- Comm. Pure Magic Stars that we have recently launched. Almost half of that sale is coming from Q-Comm and similarly Brownie and a lot of other innovations. So therefore, a lot of the innovations we’ve been able to build through the entire digital commerce and that’s the strategy going forward.
Nitin Gupta
This is really helpful. We are basically aligning with the evolving consumer needs. Thank you, sir.
Operator
Thank you. Next question is from the line of Latika Chopra from JPMorgan. Please go ahead.
Latika Chopra
Yeah. Hi, Varun. Thank you for the opportunity. My first question was, checking your confidence on demand recovery. You talked about a marginal uptick in urban and rural demand trends. You have delivered close to 10% revenue growth in this quarter. Much of the pricing is behind us and you would assume that incrementally growth is going to be transaction led, as you mentioned, do you anticipate further acceleration in overall revenue growth through rest of the year?
Varun Berry
Latika, we are going through turbulent times, really with Mr. Trump and all that’s happening on the international front. So it’s very difficult to judge where the consumer sentiment is headed. But yes, we’ve seen very good growth this quarter and hopefully we’ll be able to continue with that momentum as we go forward as well.
Latika Chopra
Okay. The second thing I wanted to touch upon was a little better in detail was around your comments on market share in regional competition. You just alluded that gross margins probably will improve sequentially. But do you see a need for higher competitive spends to deal with the regional competition which is gaining? And in that light, do you expect EBITDA margins for full year to still hover around last year levels or improve from there or do you see any significant risk on EBITDA margin? Thank you.
Varun Berry
So, Latika, I think we’ve taken our price increases today. We are in a good place. We’ve also been able to create a war chest for ourselves to be able to spend, if we need to, in specific territories, specific states against specific players. So we are going to fight many battles in smaller territories. And we are doing a specific analysis on each one of these competitors. And I think we are in a very good place to be able to do so now with the inflation/deflation cycle sort of behind us and our, you know, having been able to mitigate inflation with all the measures, including cost efficiency program. So I think we are in a good place to be able to take this forward in a stable and good way.
Latika Chopra
So you think, ability to sustain margins, you have fair bit of confidence, to sustain or improve margins over the last year at operating level.
Varun Berry
Yeah, yeah.
Latika Chopra
All right. And the last bit for me was, two checks. One was on if you could give us some color on how are you thinking about the other operating income number on a full year basis for FY ’26? And also if you could give us the number on capex for the year. Thank you.
Varun Berry
So other operating income. So, yeah, it’s good that you bring that up. So in the last year’s results, the other operating income was higher because in Ranjangaon, we had made the investments which were necessary to take us to a ultra mega project from a mega project which gave us a windfall in Q1 of 2025 and that’s why the number there is higher than what it is this year. However, having said that from here on it’s going to be pretty linear so that should not be a fluctuating number any longer.
Latika Chopra
Understood. And anything on capex incrementally.
Varun Berry
Capex we are just keeping it very tight this year, Latika. We just want to make sure we’ve got enough capacity. Wherever we need capacity like for example Jim Jam we need capacity, we put up some new plants recently we put up plant in Tirunelveli and in UP and we enhanced our capacity in Orissa. So we’ve got good capacity right now, we’ve got decent headspace. I won’t say that it’s sort of, too much but we’ve got decent headspace, so we want to keep the capex low. So I would say but how much, Ram, INR100 crores is what it would be this year which is much lower than what we’ve seen in the past few years.
Latika Chopra
Thank you so much for the detailed answer.
Varun Berry
Yeah.
Operator
Thank you. Next question is from the line of Percy Panthaki from IFL Securities. Please go ahead.
Percy Panthaki
Hi, sir. So basically just I know this has been discussed but again on the gross margin front just wanted to understand as to when this palm oil cost reduction and duty reduction which quarter is it going to hit us? Did it hit us partially this quarter or it’s going to be Q2 or Q3?
Manoj Balgi
So the reduction was given by the government somewhere in May and part of the benefit has already come in Q1 but largely it will come in Q2.
Percy Panthaki
Okay, because you would have some holding period also of inventory that’s why I’m asking.
Varun Berry
No, no we don’t have holding period it whatever we buy, what, what it — the duty which exists today is applied. So there’s no stock which hits us in adversely or favorably as far as duties are concerned.
Percy Panthaki
And how relevant or how big is this duty cut plus whatever cut has happened in the base price itself? I mean in terms of gross margin basis points is it like 50 basis points, 100 basis points? What does it translate to, assuming all other factors constant?
Manoj Balgi
Percy, a little bit difficult to say because with the duty cut it also depends on the international prices, how they move, etc. Right? So just to put a quantification will be a little bit difficult on the number, Percy.
Varun Berry
Percy always asks very tough question.
Percy Panthaki
No problem sir. Okay. So another thing follow up to this is since all commodities are cooling off, do you expect any kind of this benefit to be passed on to the consumers or more likely to maintain current price levels because anyways margins were under pressure?
Varun Berry
Yeah. So I think more of the latter. But if there’s need to do anything, as we spoke earlier, if there’s any need to be competitive in certain territories we will make sure that we do that.
Percy Panthaki
Okay. Second question is, so you have continuously sort of highlighted that in the Hindi heartland states you have lower market shares and you are sort of going to increase market shares there. So as one of the company’s overall growth driver is this the main thing or I mean do you think that, I mean excluding this region do you think that the company can still grow volumes at mid single digits over next three, five years or it’s mainly sort of going to be this region which is driving the growth.
Varun Berry
No, no it’s not — we can’t base our numbers on just one region. This is a focus area that we are working on. But a lot of the markets are so big for us like the south is so large if we’re not able to sustain our momentum there. So obviously this is important part but not the only part of our strategy.
Percy Panthaki
But sir, in south like per capita incomes are also a little bit higher than India. Penetration is full. Of course there is a premiumization angle always. But what really will drive market share in let’s say south India where your market shares are high, where per capita consumption and not in value terms but at least in volume terms is pretty decent. So do you see that region or that the industry overall for that region to be sort of a decent mid single digit growth industry or that’s not the case anymore.
Varun Berry
No it is, it is. But if you are saying that if you’re talking from a market share perspective then the Hindi belt is going to be an important part of our equation. Right? But if you’re talking about growth perspective then we’ve got to grow obviously we have to grow through penetration in a lot of the states that we operate in currently and it’s going to be important for us to grow each state and not just the Hindi states because that’s not going to give us overall growth for the company.
Vipin Kumar Kataria
So just to build on this, see. So while we are talking about the aggregate market share but within that market share there are a lot of subcategories which have a, which have a big head space. So just to give you an example, wafers in south we are underleveraged in terms of our market share and therefore there is a big opportunity in terms of gaining share in that market. Similarly, Crosso is a big opportunity and there are a lot of other premium products where we have a headspace to grow market share. And therefore that should be built through the penetration which Varun was talking about.
And therefore that should give us, you know, that entire opportunity to gain market share even in the mature markets. And obviously the growths have to be more homogeneous. It cannot be only dependent on these four, five opportunity states. I think the other angle is the channel angle which is becoming now more and more mature. So let’s say the modern trade penetration, the quick commerce penetration is another dimension to build the growth as well as market share. So I think how we look at market share as well as growth is basically a grid of channel and geographies and therefore that interplay is very, very critical when we talk about market share in categories.
Percy Panthaki
Got it sir, very helpful. Thank you. All the best.
Operator
Thank you. Next question is from the line of Tejas Shah from Avendus Spark. Please go ahead.
Tejas Shah
Hi. Thanks for the opportunity. So across industry we are seeing strong traction in health, nutrition, wellness-led launches, especially on D2C and quick commerce. And interestingly on the previous answer you also called out that quick commerce and modern trade is an opportunity which is under-indexed. So do you see any portfolio gaps or opportunities for us in this space? And especially like, let’s say something like SuperYou if you saw those brands are getting immediate traction on wellness platform and quick commerce channels. So just wanted to understand your perspective on this.
Siddharth Gupta
Okay, so I’ll answer that. Siddharth here. So the way we look at it is we keep a check on trends which are developing. And you’re right, health is one trend which is becoming salient especially on quick commerce. Similarly, indulgence is again a similar trend that we are seeing. And to cater to these trends, if you recall, even in the presentation there was an innovation launch that we spoke of which is NutriChoice 100% millets, which is actually catering to this trend of healthier offerings which the quick comm consumer is seeking. And similarly the pure magic Choco Tarts that’s lined up is again catering to the indulgence trend that the same quick commerce consumer is seeking. So we are keeping a tab on that.
And Milk Bikis Smart exactly also caters to the same — I mean, the mother is looking for healthier offerings for their kids. So therefore you are right, these trends are there, they are becoming relevant. And to cater to those we already are launching new innovations and work is happening to kind of be ready with more such products which cater to the consumer trends.
Varun Berry
But point is taken. Your point is right. There are certain startups which are making their presence felt by breaking into certain categories which are, sort of not visible before they come into the market. I think those are trends that we have to watch out for and make sure that we have those in our arsenal as well.
Tejas Shah
Very clear. Second is last quarter you had called out certain distribution reforms to increase volume per output. So just wanted to know where are we and are we seeing any tangible outcomes already on that?
Varun Berry
Yeah. So we have the RTM project, Vipin?
Vipin Kumar Kataria
Yeah, so thanks for the question. So basically the project is about building the bespoke service level, which is, let’s say you have ultra high potential outlet, you need to service it adequately so that we can build on our availability as well as range. So that the project has been on for the last four months. Now we are scaling it up. The intent is to make sure that 70% of our urban retail is covered through this model. So we are already one third of the entire scale up has been done. And this quarter and next quarter is when we are making sure that 100% of the project scope is covered.
The initial results are good. We are getting good delta growth for our biscuit categories and even higher delta growth for Cake, Rusk and Crossiant. So I think the project is shaping up well. We are right now in the war room. We are making sure that as we scale up, we improvise. It’s very important for us to also keep all stakeholders engaged because there is a large change and therefore change management is something which is very critical. We are also making sure that this is also beneficial to our channel partners, our distributors, because that’s what will bring the stability. So I think the first four, five months of the scale up pretty good. And we have a very clear side of scaling this up to that 70% level in the next four, five months.
Tejas Shah
And this one-third rollout that we would have done that would have given much higher number than what we have logged at average level?
Vipin Kumar Kataria
Yeah. So the delta growth is high single. Right? So how we measure this is basically the pilot versus the overall universe. And there the delta growth is coming to high single. And that’s giving us the confidence that by servicing these high potential outlets at the right frequency will build throughput and range.
Tejas Shah
Perfect. And if I may squeeze last one. You mentioned very positive outlook on raw material prices. Just wanted to know, are there any specific markers which are giving you that confidence? Or is it just general sense of optimism?
Varun Berry
No, I didn’t understand the question.
Tejas Shah
Sir, in your remarks you mentioned that you believe that the worst of RM cycle is behind us. So are there any specific markers that we are tracking which gives us this confidence or is this just a sense of optimism that we have?
Varun Berry
No, no, no. It’s. It’s completely scientific. Manoj, why don’t you comment?
Manoj Balgi
Basic supply demand construct of the commodities have been factored in and that’s why we feel that the price outlook should be quite stable in terms of commodities.
Tejas Shah
Got it. That’s all from my side and all the best.
Varun Berry
Thank you.
Operator
Thank you. Next question is from line of Nehal Jham from HSBC. Please go ahead. Nehal, you audio is not clear.
Varun Berry
Your voice is muffled, Nihal.
Operator
Nihal, can you speak through the handset please?
Nihal Mahesh Jham
Sorry. Sorry for that. Is that better?
Operator
Yes.
Nihal Mahesh Jham
Yeah. So two questions. First is on the regional competition. You didn’t mention at the start of your presentation. So is it generally we’ve seen that. The competition comes up and there is a massive price reduction that happens on the RM side. Maybe at this point in time there is a moderation but not as much. So is it that the color of regional competition has changed where rather than just being price driven, even in terms of innovation or products, they are sort of matching up and now this is not just becoming a RM driven regional competition but more serious as we consider ahead?
Varun Berry
What’s happened over the years if you look at what’s happened to the biscuit industry, about 14 years back, the margins in the industry were about 3%, 4%. Right? From that it’s moved to teens now. Right? So whenever, and the Indian entrepreneur, you know, whenever they cite potential of making margins, they will be there to make sure that they enter the market. And we’ve seen some entries happen like that. And when people come in, they do get some, you know, fruit for whatever they’ve done. Right? So it’s always important to make sure that we understand where and what their strengths are and make sure that we nullify them in whatever way we can as we move forward.
The reality is that the margins are going to be much higher than what they were in the past. And the reality also is that there will be competitors who will enter this category and remain in this category. Obviously some of them will sustain themselves. A lot of them will not be able to sustain themselves. It’s up to us to read in their strategy and make sure that we act accordingly to be able to sustain our numbers in those territories. Right? So that is where it is. It’s impossible to have no competitors coming into this category. Right? Because it will happen. Right? There will be smaller players coming in now. It’s up to us to be able to counter them as we go forward.
Nihal Mahesh Jham
So point taken. The second question was that on the adjacencies, if you could just give more color on cakes and breads, I think that is something you’ve not highlighted much and the overall agency growth, if that is possible.
Varun Berry
Yeah. So bread has been doing really well for us. Bread, where we were obviously not accretive on margin, etc., the growths have been very good and even the margins have been pretty good. Obviously a little lower than what our company margins are, but they are pretty good. So bread business has been doing quite well. We’ve been able to spread ourselves. We used to be a north-centric business. We still are heavy in the north, but I think we’ve been able to get our business in Hyderabad and Bangalore and Chennai, Bombay, obviously we already were there. So we’ve been able to spread our business across the country which is good and we will make sure that we continue to do that and have a nationwide footprint as far as bread is concerned.
Cake has not been a great story. Cake growths are single digit, they are not double digit as I spoke about for the other categories. The reason for that is again, margins-led. We had a margin issue on Cake and we tried to move price point from a INR10 to a INR15 and we sustained certain volume and revenue losses when we did that. So that was a strategic move from our side. Obviously with UPI and digital payments, etc., we thought price points are not as critical today, but it seems that they are. So we are reassessing that strategy. Obviously we do want to get the margins up, but we are reassessing that strategy and we will be in a good place as far as Cake is concerned. We have had a very good response to our relaunch. Some of our categories within Cake have been doing really well, like Brownie, etc., have been doing extremely well. Once we get this right, the margin and the volume and revenue growths, I think we’ll be in a good place as far as Cake is concerned as well.
Nihal Mahesh Jham
Thank you so much.
Operator
Thank you. Next question is from line of Amit Sachdev from UBS Group. Please go ahead.
Amit Sachdeva
Hi, thank you so much for taking my question. Small clarification on the SAR evaluation again, although it’s, it’s good that the interests are aligned and you know, employees, I assume that’s linked with economic value created and that reflects in the stock being ESOP being revalued. Can I just get a broader sense? Say there’s a 10% increase in say stock price in a given time frame, say a quarter or two. How one should think about the P&L impact of that? Is it that, you know, I assume it’s a structural company and it grows earnings every year. How one should think about structurally taking into account without having to worry about each quarter’s one-off impact of it and how margin should be interpreted. Although I see that it’s a thing that will happen. But can you give us some guidance how it is really calculated with reference stock price?
Varun Berry
No. So it’s very simple. See in a normal market it goes up whatever the stock price goes up by. It’s just been that overall the times have been very turbulent. The stock price had gone down and then it came up. And in those turbulent times, you will see these bumps in the road. So I think as things become smoother, I think it will be. See if you look at the range in one year, as far as our stock price is concerned, it’s a very wide range and that’s what’s created this number. Right. So with, with a smoother road, I think this, this kind of bump doesn’t happen.
Amit Sachdeva
Got it, Got it. That’s very helpful. It’s just that, but where I’m coming from is that I want to sort of always want to know how we are at the EBITDA margin level, you know, from a cycle input price, cycle point of view. And that sort of come in the way of getting that benchmark. Right? That’s just the only thing.
Varun Berry
Okay, understood.
Amit Sachdeva
All the best. Thank you so much for this response. I really appreciate. Thank you.
Operator
Thank you. Next question is from line of Jay Doshi from Kotak Securities. Please go ahead.
Jaykumar Doshi
Hi. Thanks for the opportunity. I’ll just have a small sort of, you know, follow up on the previous question itself. So if we assume that the stock remained at these levels for the next two, three quarters, then is this INR52 crore charge is the all we’ll see for the full year? So should we think of it that your underlying employee cost without SAR’s charge was about INR190 crore this quarter. So that will continue ballpark at that run rate for the next three quarters and this INR52 crore is basically something you see at a full year level, Is that right understanding?
Varun Berry
Yes. If the stock price remains stable, there will be no charge as far as SAR is concerned.
Jaykumar Doshi
And if it moves up 10%, it will be INR5 more crores, right?
Varun Berry
It’ll be. Yeah, it’ll be small.
Jaykumar Doshi
Understood. Okay, that’s very helpful. Second is, Varun, could you please share…
Manoj Balgi
Your previous previous will be a 10% of INR50 crores. May not be a right assumption because these are all basis the model that is used. Right. So we use the Black-Scholes model which is a predictive model of what the prices are going to be basis the past movement. Right. So it’s a predictive model. So a simple extrapolation of 10% price increase will result into 10% extra charge may not be right.
Varun Berry
Might vary a bit.
Jaykumar Doshi
Understood. Okay. And you know, the other question was on, could you share your thoughts on, quick commerce channel from two or three different dimensions. One is, where is your current market share in the channel, how under-indexed are you if you are. Second is, how do you think about this channel as a, from a competitive standpoint? Could it actually, create a significant fragmentation in some of the categories that you operate in? Third is, profitability of this channel vis-a-vis other channels. And fourth is what will be the share of overall advertising budget that or ad spend, A&P spends that this channel can sort of entail.
Vipin Kumar Kataria
Okay, so I think it’s a long four part question. So first, like we said, Q-commerce in terms of salience is pretty good. 75% out of the 100% of E-commerce that we do. The salience is also building up in let’s say metros. Today we supply close to 160 cities, 3,500 dark stores. And how we see E-commerce or Q-commerce evolving is that this is one channel which will augment our omni-channel approach. So just to give you an example, the INR5 and INR10 price point which Varun was talking about, the salience coming from these salient price point is less than 5%. So therefore the entire point is to build E-commerce in a way that it does not conflict with our larger distribution system, but it only augments our distribution.
The second point is the range that we sell. So let’s say Pure Magic Stars or a Harry Potter or cheese or cheese portions. So the salience that these innovation and new categories that we are getting through E-commerce is fairly significant now. And therefore the investment that we are doing in E-commerce is commensurating with the salience. The third part is building the capability for E-Commerce. So today we have got a complete end to end model right from social listening and then building on what the buy boxes and the reviews are saying. Also using the entire full funnel approach in terms of what is happening, the visibility and the investment that we are doing and using the entire demand side platform to build conversion. So I think that’s the track that we have taken in E-Commerce and therefore the approach that we have is far more holistic.
As far as the operating margin is concerned, I think today we are in the investment phase and therefore we are investing so that our growths are pretty good. Coming to market share, we have close to 500 points higher market share in E-Commerce which is a very good thing. So if you actually inquire about the market share lot of FMCG companies are getting through E-Comm, you will realize that the market share in E-Commerce is actually lower than their overall aggregate market share. So I think that is what one big plus that we have that our market shares are fairly good. The other point that you talked about was on profitability. So the way to see profitability is that you need to sell a much better premium mix and therefore that is one KPI that we drive that how do you drive higher gross margin innovations and new categories and products? So let’s say if NutriChoice is more profitable, so how do you make sure that you build salience in NutriChoice and therefore build gross margins and therefore the flow through is good without hampering any kind of investment. So I think that’s our approach from a profitability point of view.
So I hope I have addressed all four, maybe not in the same sequence.
Jaykumar Doshi
Sure. Thank you so much.
Operator
Thank you very much. Ladies and gentlemen, we’ll take that as a last question. I’ll now hand the conference over to Mr. Ayush Agarwal for closing comments.
Ayush Agarwal
Thank you everyone for spending time with us on the call today. We look forward to interacting with you again in the future. Thank you and have a good day.
Varun Berry
Thank you.
Operator
[Operator Closing Remarks]