Britannia Industries Limited (NSE: BRITANNIA) Q3 2026 Earnings Call dated Feb. 11, 2026
Corporate Participants:
Yash — Investor Relations
Rakshit Hargave — Chief Executive Officer and Managing Director
N. Venkataraman — Executive Director and Chief Financial Officer
Vipin Kumar Kataria — Chief Commercial Officer
Manoj Balgi — Chief Manufacturing and Procurement Officer
Analysts:
Avnish Roy — Analyst
Miyosha — Analyst
Vivek — Analyst
Arunav Mitra — Analyst
Lam Cosil — Analyst
Nihal Jam — Analyst
Hareet Kapoor — Analyst
Amit Sachdeva — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Britain Industries Limited Analyst 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. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchstone phone. I now hand the conference over to Mr. Yash from Britannia Industries. Thank you. And over to you, sir.
Yash — Investor Relations
Good morning everyone. This is Yash from the Investor Relations team. I welcome you all to the Britannia earnings call to discuss the financial Results of Quarter 3 for Financial Year 2025 26. Joining us today on this earnings call is our CEO and Managing Director Mr. Rakshit Hargavi. Executive Director and CFO Mr. N. Venkatraman. Chief Commercial Officer, Sales and Replenishment, Mr. Vipin Kataria, Chief Manufacturing and Procurement Officer, Mr. Manoj Balgi, Vice President Marketing, Mr. Siddharth Gupta and General Manager Corporate Finance, Mr. Ramurthy Jayaraman. The analyst deck is uploaded on our website. Before I pass it on to Mr. Rakshit Hargave, I would like to draw your attention to the Safe harbor statement in the presentation. Over to Mr. Rakshit Hargave on the remarks on performance.
Rakshit Hargave — Chief Executive Officer and Managing Director
So good morning to everybody and this is my first call with Britannia. So I look forward to engaging with you and also taking on the questions which you will ask. So I will go through the deck slide by slide and you can follow me there. So if we start with the performance scorecard specifically for Q3 2526, you would see that in terms of revenue from operations we have clocked 4,885 crores.
And if I try and look at how does it measure in terms of growth, you will see that on a 12 month horizon we have grown at 9.5%. And on a 24 month horizon we have grown at 16.5%. Consequently, the profit after tax at a Q3.26 level is at 13.9% of revenue. On a 12 month it is growing at 16.9%. And if I take a 2 year horizon it has grown at 22.2%. So you would see that the financial performance is very robust. If I go and look at the YTD basis. So from quarter we moved to YTD, you will see that we have clocked till December 14,172 crore which on a 12 month basis is a 7.7% growth and on a two year basis is a 13.1% growth.
Similarly tat at a YTD level we are at 13.1% of revenue. On a 12 month basis we are at 14.6% and on a 24 month basis the growth is at 15.8%. Next we take a view on something which is very important to us in terms of how are the commodity prices behaving. So you will see that generally commodity prices have been stable for us. If you take a look at wheat flour, which is very important, is actually came down marginally in Q3 26. And as we know that February, March are critical season for wheat and based on this we will see how it behaves going ahead in the future.
But at the moment it looks to be stable. Similarly, RPO has also in the last three quarters come down. Sugar is also kind of stable and we believe that whatever information we have is that will remain relatively stable going ahead. Same with cocoa which has also come down. Laminate price is also very stable and milk price is also slightly stable. How milk behaves going ahead in the future is what we have to see. If I then take a look at some of the key five driving strategic priorities which we have mentioned, so I would probably take them briefly one by one.
The first one, which deals with our efficiencies in sales, distribution and supply chain continues. I think we are consistently striving that how do we bring more leverage in our sales and distribution model and how do we juice more out of our supply chain and that works like a good machine. The second one is about elevating brand experience and investment. So obviously we have upped our investment on the brand and this will continue going ahead where we want to build strong sustainable modes around all our brands. The third is how do we drive our innovation adjacencies.
And I’ve also mentioned future platforms. So obviously we will be working towards developing something which is exciting and something which is also relevant going ahead in the future. We’ve also put a section on focused intervention to fight regional competitors. We all know that regional competition has come up and they are doing their best and some of them are also doing well. So we need an enterprising plan to fight them back and we are putting specific resources to do that, which is why I have also put that as a strategic priority to be driven. And obviously the fifth one, which is sustainability which continues, which lies at the heart of many things that we do.
If you also see this visual, the next slide, we’ve gone ahead with Britannia, Nutri Choice with a new campaign and you would see that Amir Khan is there on the campaign and it has Got good feedback. It’s been there in the market, I think on the media for about a month and a half. Similarly, Little Hearts, which I call a resident jewel, is doing very well and we are also supporting that which are premium cookies, which are getting a lot of focus in modern trade and larger gt, which is also doing very well. So Bodik Crafted also is on media.
Similarly, if I take a look at some of our other verticals, so you would see that the cheese triangles from Laughing Cow, they’re also on tv and we believe that snacking is an opportunity where we can develop it significantly. Also Rusk Britannia Toast Tea and also Britannia Cake, which are also evergreen additions to our portfolio since long, are also on media. I would also want to talk about a couple of new products and innovations which have gone in the market. So what you would see on the left is cheese dipped 5050 cheese dips. So this has been launched under the Britannia 5050 platform.
It’s a very exciting product. It is getting rolled out nationally as we talk. This is basically a sweet cheese layer between two crackers. If you haven’t tasted it, please try and taste it. So we will also have a caramel version coming out very soon. And then we also have fudge. And as you would see that we will also be having vegetarian versions of the fudge cake, also layer cake. And also we’ve launched what we call dood Mari in select markets where Mari is strong and there is a lot of equity for milk. So all these are actually entering the market as we talk.
Similarly, on what we call is our adjacency business, there are new versions of cake. We’ve also relaunched our satvam Cow Ghee, which is getting a very good response. And also you will see that our Toasty, which is our rusk, where we are now having a campaign, Karari Shurua Toasti KE Saad. What is interesting is that all these four categories, cake, rusk, khoza and wafers are growing in double digits. And we can also see that the traction that they’re getting in E commerce is a lot more. They are literally about three times of biscuits. While our cheese business is growing more, I would say marginally, but the other businesses like milk drinks and we’re actually entering into the season of drinks because February is the month when people start building for vinking cow and ghee is growing much faster.
So some points on our sustainability and esg. So like we said that building a sustainable, profitable business is at the heart of Britannia. And let me take you through the progress on the ESG KPIs. So we’ve had 5.7% reduction in specific water consumption, 2% increase in women in the factory workforce which is now allowed even for night shifts with their consent. Britannia Nutrition foundation continues to do good work and There is a 27% increase in the beneficiary through this foundation and also in CDP we’ve got a sustained B rating in cdp, climate change and water security themes.
Also I would want to make a mention that the Britannia Nutrition foundation work in terms of giving energy dense food material to undernourished children has been recognized as the best CSR project of the year 2025 at the CSR Summit in Awards 2025 organized by the UBS Forum. This is something towards which the company is extremely committed. We will now run through the financial results and maybe I ask Venkat to take this through so I’ll take it. No issue. So like we said, as you will see the trend that we clocked 4,885 crores this quarter and if you take a look at the last two successive quarters we’ve been growing successively and I said that our 24 month growth is at 17% and our 12 month growth is at about 9%.
Similarly if you take a look at our key Financial Lines, quarter three specifically at a consolidated level, sales 9.5% operating profit at 895 crores at 17.4%, PBT at 919 at 18.1% and PAT which is our share at 680 crores at 16.9%. So you would acknowledge that these are healthy numbers. And if you see the trending quarter wise you will see that we have been pretty stable and actually in Q2 and Q3 we have moved ahead of Q1 which was a relatively lower number. Similarly if you take a look at YTD basis with the same parameters mapped on YTD so we are at about 7.7% in terms of sales growth, operating profit is at 13.5, profit before tax is 15.1 and PAT our share is at 14.6.
And here also if you take a look at year by year trend, so 2425 say 16.4 profit from operations Pvt at 16.7 and Cat at 12.4. And you can see the comparison with the previous years and make a note where we are as compared to the earlier years. So this was the brief on the financial lines. So this is what we had to share in terms of the output from the deck that we have Loaded. And I guess now we are ready to engage with you and we are welcome to take questions. Thank you.
Questions and Answers:
operator
Thank you very much. We now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles participants. You may press Star and one to ask the question. I request to all the participants. Kindly limit your questions to two per participant and rejoin the question queue for a follow up question. The first question is from the line of Avnish Roy from Nuama Wealth Management. Please go ahead.
Avnish Roy
Thanks and congrats on very good set of numbers. My first question is on the 3x data which you are given that E commerce quick commerce for cake, rust, cross eye and wafer is 3x of biscuits. I wanted to understand reason and whether there is an opportunity to close this gap of 3x is the reason that the national players are much lesser in croissant wafers because K crust my sense is fairly legacy business like biscuits plus we have seen another foods company like Nestle last two quarters. They are really ramped up on E Commerce quick commerce. So is that an opportunity in biscuit side of the business? That is first question. Thanks.
Rakshit Hargave
Okay, so to answer the question, I think the fact that we are able to drive the adjacency businesses which we Talked about at 3x should also be looked at positively because the fact is these are also more relatively novel for the consumers and we have upped the investment. But at the same time, like you rightly said, it is also an opportunity for us to drive our mainline biscuits much faster. So you would see that the way we treat E commerce and the investments that we do will become much stronger because we believe that the opportunity in driving both our adjacency and mainline biscuits is far higher.
Avnish Roy
Okay, one follow up there. Most of the legacy companies, that is the category leaders tell us that E commerce quick commerce at least on the profitability side is generally is higher than the general trade for you, at least for biscuits, rust and cake. Is that true that E commerce quick commerce is now more profitable than general? That is my first question only if not the second question. Thank you.
Rakshit Hargave
It’s more or less at the same level. So it’s not that in some categories maybe we are slightly less, in some categories we are a bit better. But if you take a look at the overall portfolio I don’t think there is anything significant which is different.
Vipin Kumar Kataria
Hi Abneesh. Vipin. This side. So see on the first question which is on the biscuits. See so biscuits is a very, very large portfolio for us and it’s a mix of staples. Then there is indulgence and there is impulse. So what we have seen is that in the quick commerce today, because there is instant gratification, occasional consumption which is happening, there is a very clear acceleration which is happening on the indulgence and the impulse side. Right. So let’s say a Mari or a good day. The top end of good day is doing well. But the staple brands will take a while because the shopper mission is a little different.
What has happened in Crozant wafer cake also is that this entire wave of impulse and instant gratification has really helped us accelerate our business. And like Rakshit is saying that the intent is that even the other side of Biscuit which is more planned purchase staples starts moving up. So I think right now in E commerce we are in a leadership position and that gives us confidence that by doing more investment we will be able to accelerate the growth even higher. I think on the profitability side we are today in a pretty good shape. The intent going forward would also be to launch lot of digital first brands where it will be margin accretive adding to the overall profitability story of E commerce.
Avnish Roy
Thanks. My second and last question will be on the sales growth and competition. So the 12% sales growth in November December, any one off effect of channel refilling given GST issue was behind. Second is local competition. Earlier MD had said was largely in eastern India and you have said that that is one key priority to take on some share back from local competition. Is that because opportunity has arisen because of the GST rate cut that compliance will now be more of a challenge for local players or the local competition is a genuine problem in most parts of the country. That is the second question.
Rakshit Hargave
So Vipin, maybe let me make a few comments and that you can join in. Yeah, so October was a transition month where we saw a bit of a diploma. But I think in November, December, I don’t think there is any impact of channel filling. This is routine business based on sellout and consumption. So which has kind of stabilized in terms of regional competition. Yes, I’m aware that in the past we have talked about regional competition in the east. The truth is that there are pockets of regional competition in regions apart from east also and they are all operating like small, active small units.
And I Think our plan is to address that in a focused manner. While we are a large company, how do we really compete them on even terms on the overall product and marketing mix? So I would say that while east is a hotbed of competition, but regional competition exists in other clusters also which like he said that we have actually mentioned as one of the strategic priorities in terms of how to address that. Vipin, would you want to add more to it?
Vipin Kumar Kataria
Yeah. So there is no impact of let’s say inventory going down and inventory fill up. So I think we have had a smooth transition for gst. So basically, you know, we are focusing right now in increasing the transaction which is number of packs sold because that is the most important for us to capture that shelf and market share. See, on the regional player there are two kind of regional players that we see. The first one are the unlisted players, I would say, which are basically very, very localized players. And as the flower rates or the commodity rates are benign, these are players which will give extra value and trade schemes and therefore go up.
Now to counter them. We are building and increasing our investment in the brand like Sakshit is saying. So that will be for the localized player. The regional players play on their strength of understanding of flavor consumer and they have created certain formats which are very good. So I think our game right now is to make sure that we quickly adopt and adapt the manner in which these regional players are developing these flavors and formats and very quickly hit them, you know, in certain pockets of the market where, you know, we are getting a pushback.
Avnish Roy
Thank you, that’s very helpful. Thank you.
operator
Thank you. Next question is from the line of Miyosha from Nomura. Please go ahead.
Miyosha
Hi Rakshit, congrats on your new role and team for the great set of numbers. First question is on the demand environment. First, if you can just break up that 9.5% into volume value. The other thing is that the other large player for most part of the third quarter was seen to remain at 4.5 and 9 rupee price point. So did this have any volume pressure for you for the quarter? And has all the industry now moved back to the 5 and 10 rupee price point with higher grammage and the impact on volumes on the back of that in the coming quarters? So that’s my first question.
Rakshit Hargave
Okay, so I think Meher, thank you for your comments and I think what you’ve asked is a relevant question. So if you take a look the overall value growth we have, so obviously it is a mix of volume and it’s also a mix of the higher value realization because of the GST difference. So, as you would know that when GST transition happened, Britannia being the market leader, we were the first company to transition. And the way we addressed the 10 rupee and the 5 rupee price point is that we gave extra biscuits. So the option was that you can reduce the price point to four and a half rupees and nine rupees.
So for a very short interim period to manage the packaging material, we did that. But we were first of the block moving to 10 rupees and 5 rupees with more biscuits. The implementation of this from the other companies has been staggered. So a couple of national competitors have moved fully, but some of them are still transitioning to the model where they will sell at 10 rupees and 5 rupees. And some large companies have not started that as yet. Now, obviously that creates a situation in the market, which I also mentioned in the release, that price points post GST are still stabilizing.
So obviously what is happening is that when you are going to sell the biscuit at 4 and a half rupees and 9 rupees, ultimately the consumer is usually ending up paying 10 rupees. So this arbitrage is actually landing in the pocket of the retailer, which could mean that in certain sections and certain channels there could be a diversion of some business towards these companies where the retailer is seeing the opportunity to create some temporary advantage for himself. And as a result, the volume growth would be slightly asymmetrical across these channels. But we also hope that, you know, this is something which is going to get corrected very soon.
But at the moment, the market is still in a bit of flux because all companies have not fully moved towards the 10 rupee and 5 rupee price point. And two price points on the packaging still exist, which is a bit confusing. Vipin, would you want to add something on this?
Vipin Kumar Kataria
Yeah. So see, the corner store of this entire GST transition, which is mandated by the government, is to pass the benefit to the consumer. And therefore, like Rakshit said, we were first in the block to move, give that extra grammage and value to the consumer. But what has happened is that others have decided to stagger it because of certain tactical gains. And I think that’s been a difficult phase. But we have kept our focus in terms of increasing our distribution, our transactions, and that is what has really helped us. I think as we speak, a lot of these regional players and national players are going back to 5 and 10.
And I think by end of this quarter most of the price points would be the round price point passing the entire benefit to the consumer. But in the interim I think the trade has gained and basically people have played that tactical gain.
Rakshit Hargave
Yeah. So Mehr, you know, ultimately this GST drop move by the government is a very good move and we are extremely confident that in the medium to long term this will be very beneficial to consumers. But I think there is this period of transition which is going to have a few, you know, issues. But hopefully we are confident that it will get sorted out very soon.
Miyosha
Understood, very clear. Thank you for that. Second question is on the margin profile. Gross margin seems to have done quite well. RM prices, the way we see it, continue to remain benign. And the new innovations appear to be gross margin accretive. Can one expect the overall gross margin profile to go back to the 44% levels that we had seen two years back and more near term sequentially can one expect margins to improve from these levels on a quarter, on quarter basis? So that’s my other question.
Rakshit Hargave
So Mihir, you know, we know that the margins that we’ve had are very good and a lot of factors are at the moment favorable. So you likely said that the commodity prices are stable and maybe on the lower side. So you know, while we won’t want to make any future forward looking commitments, but a couple of reality points are, is that yes, we will be upping our investment on the brand and I believe that we need to do more. But at the same time there are multiple factors, there are modes and I think our attempt would be to balance out the margin and to kind of deliver something which is exciting.
But yes, we will be increasing our investments on the brand on the historical point as you said. Venkat, would you want to add something on that on the historical margin? Few years back which Mehr was asking.
Miyosha
Record gross margin had gone to 44% levels and we had seen some quarters going to ebitda margins of 20 levels. What it was just check. So while we’ve come back to 20% EBITDA levels, can we expect gross margins to further improve from here or do you think any investments will be put in back and the sustainability of the 20% EBITDA margin, if you can throw Some light on that one Meher
N. Venkataraman
Some light on that one Meher, you know we don’t give forward looking estimates but you know, you also know that some of the crop seasons start by March. April flower for instance. The crop season is March, April. The initial estimates are that the acreage under cultivation is significantly better subject to other things being there we are hoping that flower prices will continue to be favorable. On rpo, there has been volatility that we have seen with government intervention on duties, etc. On imports, which again has come down. We need to see what happens to that and similarly on sugar.
But you know, fundamentally we believe that the key commodities seem to be stabilizing than, let’s say in the last couple of years. We really need to go forward and see what happens. But, you know, essentially as we look at it today, this is how it looks. They are looking reasonably stable. Things can change, but.
Miyosha
Yeah. Got it. Thank you very much. Wishing you all the very best, gentlemen.
operator
Thank you. Next question is from the line of Vivek from Jeffries, India. Please go ahead.
Vivek
Hi Rakshit and team. Good morning. Two questions. First, Rakshit, for you. Now that you, you know, you have taken charge as a CEO and have been, you know, have been around for some time, what are, you know, your identified top one or two areas that you want to focus on, let’s say in 2026 or maybe next couple of years.
Rakshit Hargave
Yeah. So, Vivek, thank you for asking this. So, like I said, we are doing a few things and, you know, we will be rolling out a strategic plan which would address both the near term and medium term. Maybe at the moment I would want to highlight on the following things. If you take a look at these strategic priorities, apart from the fact that we want to drive efficiency on sales, which is a continuous program and Vipin and team are doing a good job along with the supply chain, you would have noted that we have talked about working on Brand Britannia.
You would have heard the announcement that we’ve hired a new CMO who’s going to be the CMO for all the businesses except dairy and international business. So obviously the idea is to bring a refreshed part of Britannia and the products upfront to look at them in a manner which leverages on the legacy strength of Britannia but still presents ourselves as a new modern company. And how do we elevate brand experiences? The other focus area would be, I think, where we need to do more work and where we haven’t done maybe in our assessment work is to create the category of functional foods.
So you would have seen we’ve talked about future platforms. So we would be working towards, you know, we have a great brand in Britannia, Nutri Choice. So we would be making plans in terms of how do I really expand our portfolio into a very relevant and focused portfolio portfolio in this segment where Britannia starts to play much more seriously and we would want to act on that very soon. Apart from that also there would be certain initiatives, but I think one is to keep continue working on what has worked well for us and how to develop the brand salience of Britannia in a much more bigger and modern manner. And the third would be how do we really develop this new platform that we are talking about?
Vivek
Interesting. The third one is particularly interesting. And that was my second question for you, Rakshit. When we go to any quick commerce and we heard your comment on, you know, on how, you know, you are also doing on quick commerce, but it appears that, you know, especially on the food side and maybe even in case of personal care, there is a fair amount of competition which has picked up and there have been at least one company in the FMCG space which has been very systematically acquiring, you know, these small, you know, brands since early franchises and have been able to scale up.
Well, what is your thought process on build vs buy? Because brand Britannia stands for something which is great, but then do you think there is a, there is a need to also have, you know, a few of these, look at these franchises and if possible maybe acquire some of those?
Rakshit Hargave
Yes, Vivek. So like you rightly said, we believe that Britannia by itself can do a lot more things and I gave an example. But we also believe where we have not taken off the blocks is that there are maybe attractive opportunities on the inorganic side and Britannia would be justifiably evaluating them. So the idea is going ahead that how do you really make a composite portfolio and everything cannot be built from organic. So that door is also open for us.
Vivek
Got it. Thank you very much. Wishing you all the very best.
Rakshit Hargave
Rakshitan T. Thanks Vivek.
operator
Thank you. A request to all the participants. Kindly limit your questions to two per participant and rejoin for a follow up question. Next question is from the line of Arunav Mitra from Goldman Sachs. Please go ahead.
Arunav Mitra
Hi, my first question was actually on market share where you mentioned about the regional players. Wanted to just understand if there has also been any increased competition from the national players and has Britannia been able to hold its market share versus relative to the other national players. And a related question is if I look at a lot of the priorities which you mentioned, adjacencies competing with the regional brands, better e commerce channels, do you think you would have to significantly up your investments and more in the sense that can you, would you be able to sustain your margins here? I think the previous question was more about expansion of margins, but wanted to understand if all of these require Investments which will have to ultimately come out of your current P and L.
Rakshit Hargave
Yeah. So adnab, did I get your name correct? Yeah. So yes. Yeah. So let me answer your questions in the sequence that you asked. So, yes, against national players, we are holding shares. In fact, over a two year period, we’ve actually gained share over national players. Now the point is on market share, like I said, there are two price points existing in the market on the packaging because many of the companies have not migrated fully to a 10 and a 5 and 10 and 5 are important because a large portfolio of biscuits actually sells either at 10 or 5 rupees.
So we are in discussion with Nielsen to really sort out the issue because at many places where the actual selling price should be 4.5, Nielsen is capturing it, maybe close to rupees five. But that’s a discussion that is ongoing and I’m sure that it will get sorted out. But at the moment, which is why I said that prices in the market are in a bit of state of flux and the GST transition is still happening from that point of view. But we can see that more and more companies are moving towards the finalized packaging where they are declaring at 10 and 5.
So from that point of view, the market share still remains in a bit of flux. Now your next question. The fact that we are going to be fighting regional competition, we are going to be investing in E commerce. Yes. That will require more funds and we are committed to invest that. We believe that the opportunity for us to drive Top Line better is definitely there and I think we will be taking a very pragmatic view of that. That driving Top Line is also important because we can gather far more customers who consume Britannia and our other brands.
What happens to our margin profile? Like I said, we will always keep it balanced under the check. But I believe there are opportunities where we can make a better play with investments and we will be choosing them very selectively on regional competition. The fact is, yes, we will work, as I said, small group of enterprising businesses and not treat them like national competition. So we will have a startup mentality to fight these people and we will make sure that the ambition that we have are more than the resources that we put and we actually deliver it better. So we will manage the expectations accordingly.
Arunav Mitra
Got it. Thanks for that detailed answer. My second and last question is more of a bookkeeping question. So you have mentioned this loss of state finance fiscal incentives to the extent of 65 crores for this quarter is what I understood. Also there is a like a blumping up of other operating income you got from one of the states. So should one take as the, you know, this quarter’s other operating income minus that state one times, you know, incentive you’ve got as more of the run rate going forward and any discussion with the states of potentially making up for that or at least partially offsetting that loss of incentives.
Manoj Balgi
Yeah, so you are right. The incentive that we got from the state of Bihar is something that accrued in this quarter and therefore is very specific to this quarter. However, having said that, we also have, as you may have seen, provided for the labor code impact in this quarter to the tune of 48 crore. So it’s some sense they neutralize each other. To your second question in terms of have we reached out to the state governments? We already have. Or in discussions with the state government authorities for providing us an alternate ways of providing the incentive that was intended originally.
You’re talking about converting this possibly into a capital subsidy or of extending the period of incentive or any other form that would be appropriate under the current circumstances. And we are hopeful that the government authorities are being very positive. We are hopeful that we should get some relief. Not just for us, it’s going to be an industry wide requirement and it is also going to impact those who are going to invest in future.
Arunav Mitra
Got it. Thanks. That’s it from my side. All the best.
operator
Thank you. Next question is from IFL Capital. Please go ahead.
Lam Cosil
Hi Rakshi Dhanty. Just a question on this GST about 60% in price pointed back firstly.
operator
Sorry to interrupt you but we are losing your audio. Can you please come in a better reception area please?
Lam Cosil
Yeah, just one. Is this better?
operator
Yes, go ahead.
Lam Cosil
Yeah, so see about 60% of your portfolio is price pointed packs which are essentially close to like a single consumption pack. And in this you have sort of given 12% extra grammage. So about 6 to 7% extra grammage as a portfolio has gone through. Since the net realization per kilo is unchanged, that would mean 6 to 7% extra sort of sales should come through. In light of this, the overall sales growth of 9% is a little low. So what am I missing? What am I calculating wrong here?
Rakshit Hargave
So varsity like you calculated the 9.5% growth I said is broken down both into volume growth and growth coming because of GST. So when I say growth because of GST it means about that would translate to about 4.5% and the rest comes from. Because you know our products have also rolled into the market sequentially. So it’s not that the Full quarter has sold at the lower GST rate. But yes, you are right. So about half, 50, 50 has come from volume and half has come from value.
Lam Cosil
If basically the GST rate had not changed, does it mean that the sales growth would have been like 4 to 5% in that case?
Rakshit Hargave
No. But you would also realize that because of the transition and the change there was a challenge in the month of October. So if the GST had not happened, we would have had a better October and henceforth the number would have still been more closer to what we have delivered than because of the factor that you’re talking about.
Vipin Kumar Kataria
Yeah, so I think the underlying growth cannot be called out like that because obviously the environment in which we were operating in quarter three was very different. Right from the competitive scenario to the transition which was happening factory by factory, brand by brand. So I think it cannot be equated per se like that.
Lam Cosil
Understood. So given the fact that these price cuts, or rather volume increases were happening.
operator
Sorry, we are losing your audio again.
Lam Cosil
Because you have not implemented the extra volume for the entire quarter, would it be fair to assume that going ahead the sales growth would be more towards the low teens kind of a number if the full quarter effect is sort of taken into consideration. And also given that the other competition is now moving from four and a half to five or nine to 10, etc.
Rakshit Hargave
Percy, again, two points. You know, we would not want to comment in terms of how we will deliver in the coming quarter, but like we said, Britannia has fully implemented the proposed government GST reduction and giving benefit to the end consumer. So we are like fully on the table. The other companies are still doing so and which is why there is a bit of flux in the market, in the channels. But we are hopeful of continuing good performance and you know, that’s how we see it. But yes, it also depends on how the prices stabilize. Depends on the other people also as to how quickly they are able to change.
Lam Cosil
Understood. Second question is on gross margin. This quarter we had a 530 basis points kind of gross margin expansion. Yoyo. So just wanted to understand what drove it and is this sustainable?
Manoj Balgi
You’re talking about gross margin versus the last year, same quarter.
Lam Cosil
Yeah. Versus Q3.
Manoj Balgi
Last year Q3 was when the RPO prices started. Started going up, if you will remember. Yeah, Q3 and Q4 when RPO prices started shooting up and then we started initiating the price correction activities from Q4 and Q1. So it’s a combination of two things and so one, the inflation that happened and a delayed price Increase with a lag of about two, three months. That happened for us to initiate the price increase. So now with the commodity prices tapering off on the prices, the mining stable there you see that expansion of margins for anything.
Lam Cosil
This is like a sort of clean number.
Manoj Balgi
Yeah, this is a clean number. Correct.
Lam Cosil
Okay. Okay, that’s all from me. Thanks and all the best.
operator
Thank you. I request to all the participants, kindly limit your questions to do per participant. Next question is from the line of Nihal Jam from hsbc. Please go ahead.
Nihal Jam
Yes, good morning, Rakshit Venkat and team. Two questions. You know, follow up to the earlier participant that in the earlier Q2 call also the earlier MD mentioned about the possibility of, you know, 15% offline growth, which is say the underlying 9% that the business has been doing and the potential sort of 6% coming from the grammat change that is happening on the back of GST given November, December are sort of clean numbers at 12%. Just wanted to understand that. Is there a possibility that the growth can sort of uptick to that number in the coming months or quarters?
Rakshit Hargave
So Nihar, like we said, we would not want to comment on whether we can move to 15%. But yes, November and December were clean months and we saw that we delivered close to 12%. But like we also said, the overall market is also, you know, stabilizing. So we’ll have to see how it moves on.
Nihal Jam
Sure. Aksit, just one more question. You did highlight about the, you know, all the initiatives that you plan to take in the coming months. Would it be possible to give some more granularity, specifically on the adjacencies given all of these four categories are sort of very different and divergent. So just some quick thoughts about how you’re thinking of each of them.
Rakshit Hargave
So, you know, at the moment what I can share with you is that one of the changes that we are bringing on is that the CMO is going to be responsible for Brand Britannia under all the verticals, which also includes adjacencies, which basically for us is Croza, Rusk and Cake. Earlier they were managed as a separate business and the marketing head was not directly accountable for that. So we expect to bring in synergies, common themes. And I have identified areas where there could be a multiplier effect because we treat them as a part of an umbrella family.
So at this stage I can tell you that one of the objectives of bringing in a CMO for the overall business was to also bring about more relevance for this portfolio. And that is one of the things you would also see more innovation coming also on the mainline business and also on these. So obviously we will accelerate and I think with a CMO the ability to collaborate and work with R and D more proactively and in a more agile manner will also be better. That’s what you will see. And when we do more things, we will share them in the future with you.
Nihal Jam
Sure. Quick follow up. Anything on distribution or pricing for these adjacent categories which can potentially look better or different?
Rakshit Hargave
Maybe. Vipin, you would want to comment on this?
Vipin Kumar Kataria
Sorry, I missed the question. Can you please repeat?
Nihal Jam
No, I was just checking. Rakshit mentioned about umbrella branding sort of for the adjacencies also incrementally any changes on the distribution or the pricing structure for the adjacent categories which can change in the coming months.
Vipin Kumar Kataria
Yeah, so see I think last year, which is the calendar year 25 has been little turbulent for us because we did some price changes because of inflation which didn’t go too well in the market. So we learned our lessons the hard way and we came back with those very competitive price points. And as we Exited Calendar Year 25Our Growth Rates have been. So I think whatever we had to do in terms of doing the right pricing against the local competition or national competition or driving distribution has been taken. And like Rakshit said, I think a lot of brand investment will start happening in some of these categories because Cake and Rusk are fairly large categories.
They are bigger than even some of the biscuit brands. And I think a lot of would be done on the brand side so that our off takes our pull, our repeats are good and that is then augmented by good distribution both in urban and rural. And then what we have also found is that in modern trade and E commerce where you can build discoverability, where the conversion is more instant because you’re doing activations on the platform is again going to be a big focus area. So therefore the salience of these brands is increasing in these channels and that’s a very welcome change.
So basically going forward, Omni channel approach, very strong price points, pushing back local competition and the overall brand investment is what we will drive adjacency growth.
Nihal Jam
Thank you so much.
operator
Thank you. Next question is from the line of Hareet Kapoor from Investec India. Please go ahead.
Hareet Kapoor
Morning. Just one thing on this 12% growth in November and December. How much of this was volume driven, both organic plus GST LED and how much of it was the carry forward impact of pricing over the last say 3, 4 quarters which we had done, I think we had done something in Q4 of last year. The reason I ask is, you know, we anniversarized this from Q4. I just wanted to get your sense about how much of it is volume led, gst, volume LED otherwise so we can get a clearer picture.
Rakshit Hargave
Yeah. So Harith, like I said, the 12% is equally divided between volume growth, the growth that we are realizing because of higher energy realization as a result of rate reduction. It’s about half. Half.
Hareet Kapoor
Got it. Okay. Okay. So this.
Vipin Kumar Kataria
One more dimension I would want to add is that, you know, the consumption, the, you know, the way people consume our categories also changes quarter by quarter. Right. And therefore to put any forward guidance on those numbers would be very difficult I think. You know, because like Rakshit has been saying, there is flux in the market and there is a consumption angle. Right. So I think quarter four, what we will see is healthy growth but can’t predict right now.
Hareet Kapoor
Understood, understood. And the second thing you know was, you know, there have been, you mentioned the Team edition has happened. You called it out in a release yesterday. Just wanted to get your sense about whether you feel that, you know, at least from a people perspective, you know, are there other pieces that will get filled up over time, is there need at all, etc. As you further this growth agenda.
Rakshit Hargave
I think there was a bit of disturbance on the call. Can you just repeat your question again? Hari?
Hareet Kapoor
Yeah, my question was regarding team, team additions and do you believe, you know, in order to kind of further your growth agenda, whether E commerce or innovation or otherwise, you would need to kind of, you know, you know, further, you know, add a team member. Especially like you have, you know, announced the CMO edition.
Rakshit Hargave
We will have a. Very sorry to interrupt you.
operator
We lost your audio in between. Can I request you to repeat please?
Rakshit Hargave
You want me to repeat my answer or his?
operator
Yes, yes, your answer. Yes sir, your answer.
Rakshit Hargave
So if I’m audible now, so what I’m answering to Harith is that so obviously we made an announcement yesterday. The way I would put it is that we have an overarching overall people agenda. And the people agenda means it’s a combination of positions, it’s a combination of our ways of working. It’s a combination of creating a high energy organization. And you know, we’ve already been a very admired company but we really want to take it to the next level in a very, very relevant manner for today’s world. So I don’t want to share more details on the people agenda right now, but you will see that we will move fast and we will really do what needs to be done to make Britannia sharper, focused and very relevantly aggressive?
Hareet Kapoor
Great. Wish you all the best.
Rakshit Hargave
Yeah. Thank you.
operator
Thank you. Next question is from line of Amit Sachdeva from UBS Group. Please go ahead.
Amit Sachdeva
Hi. Thank you for taking my question. So my question is on cheese category. So obviously this category was supposed to be the driver of your dairy, or at least the bellwether of the dairy foray and the value addition and things like that. But for some reason, the milk or the flavored milk has grown and other extensions and dairy has grown. But cheese, which was supposed to be the bellwether for this initiative, has not worked and clearly for several quarters. And is there a thought process how. And it’s supposed to be high growing as well. What is the thought process here? Given the investment that you’ve already made, jv, that you did, how cheese as a category will be resurrected? That’s question number one and I’ll ask my second question later.
Rakshit Hargave
So, yes, like you said, cheese has been a slow starter for us, and we acknowledge that. But let me tell you some of the things that we are doing to be able to correct that. As you would have noticed in the month of December, we also now have a new head for our dairy business who also is involved to head what we have is our cheese business, which is housed under Britannia Bell Foods, which is our JV with the French company Bell. So obviously, we are looking at cheese from all angles. So we know that we have capacity.
But I think to add that there is work that is being done to make our cheese portfolio more attractive. There is innovation which is happening, but mark my words, we are already the second largest player in cheese slices after the market leader, and we have a reasonably good position in general trade and also in select modern trade. But we are looking at innovation, we are looking at price points. We have kicked off a much more solid relationship with our JV partner in terms of what we can do. So you will see initiatives on cheese and also working much more closely with some of the modern trade customers where we have not been able to make more headway.
And you will also see new propositions coming in. So, like we said, cheese is important for us because I think from a brand perception point of view, Britannia’s domain connectivity with cheese and dairy is high and we would want to really leverage that. So I could say that we are starting a new leaf to be able to put a lot more focus here.
Amit Sachdeva
Got it. Thanks so much for that Raksheed. And we look forward to hearing more on cheese. A second question that I want to ask is the quick commerce and E Commerce foray and how biscuit as a category has interacted with it. I think we’ve been alluded to it that there is an indulgence and impulse category which is doing well. But my sense is the previous thought process was that E Commerce on an aggregate basis tend to be margin dilutive and hence is a very selective play. But given that the indulgence is growing, is it opening the opportunity for.
For aggressive expansion in new categories or new extensions, maybe chocolates or something like that, which basically can help you exploit that opportunity better and hence we should see aggressive innovation exploiting that channel and also indulgence and impulse, which are some of the categories which are absent. And is there a thought process around how we should think about that piece?
Rakshit Hargave
Yeah, yeah. So, you know, I will make a few comments. I will give it to Vipin then. You know, Vipin made a point that we are now going to also look E Commerce as a business unit where we will incubate some innovation, incubate new development and be faster to the market. And I think that’s the reality towards which we are committed as far as the, the business profitability. Like we said, I think we are fairly well positioned on E Commerce and I think we are definitely going to drive it. And Vipin, if you could add more color on the rest of the questions.
Vipin Kumar Kataria
Yeah, thanks Aksit. So I think the opportunity which Q Commerce and E Commerce present today, sheer from a category penetration point of view is immense. Right? Because the category penetration is just around 20 odd percent. So let’s say out of the 100 consumers which are going on QCOM, our category penetration is just 20. This also has moved very rapidly and as a market leader, as a brand, we would want this category penetration to go up. So therefore our entire joint business planning with the QCOM customers is basically how do we expand or deeply penetrate in terms of categories.
Now within the categories there are staple categories, there are impulse categories, there are indulgent categories. And therefore when I’m Talking about this 20% kind of penetration, that’s at an overall biscuit level. And therefore there are lot of layers which we can really unfold and we can keep accelerating that category penetration. So therefore the growth will keep coming from a category penetration point of view. The second what’s happening is that the density of the Dark store is going up in the top 15 metros. So I think that’s again a big opportunity today. QCOM is going to 150 plus cities.
That’s another dimension of opportunity. The fourth dimension of opportunity, what we call now is resident jewels which is that while we have so many brands, but there are certain brands where we have under invested, there is good margin profile of these products and therefore let’s invest rightly in these products before we set up this entire business unit which Rakshit just spoke about. So let’s say little arts in our portfolio is a brand which I think we have not invested enough, we have not focused enough. And therefore there are those resident jewels which we will start focusing and that’s very apt for Q Commerce and E Commerce.
And therefore what we have seen initially is very, very good growth. Right. What we are also saying is that whatever investment that we do will also be synchronized on the platform so that what you see on digital, what you see on TV will also come alive on the QCOM and the E Comm platform. And therefore there is a complete 360 experience uniformity of experience that a consumer sees. Then there is a fifth leg which I spoke about which is how do you make sure that our margin profile keeps moving up? Right. So therefore what we are saying is that there are lot of these resident jewels where the margin profile is already good and then what we are launching specifically for QCOM will give me accretive margin which will ultimately start translating into good profit from operations.
And we are already ahead of the competition both in terms of our market share as well as profitability. So we are very clear and excited about this entire transition which is happening. Right. And that gives us an opportunity to give the right kind of assortment at the right kind of margin to the consumer.
Amit Sachdeva
Got it. Vipin, if I may ask, what is the current E Comm and Quickcom like a revenue salience for you and where you see say two to three year view where it could be, See.
Vipin Kumar Kataria
So right now it’s high single and see we know that every quarter this is moving up, right? So what we will end up with a high single salience. I think this certainly will move very quickly, maybe to the early teens or tweens. Right. Is how we see this going forward in FY27.
operator
Thank you very much, Amit, for your question, ladies and gentlemen. We will take that as the last question. I’ll now hand the conference over to Mr. Yash for closing comments.
Rakshit Hargave
Thank you everyone for spending time with us on the call today. We look forward to interacting with you again. Thank you again and have a good day.
operator
Thank you very much. On behalf of Britannia. Sorry sir. Go ahead. On behalf of Britannia Industries Ltd. That concludes this conference. Thank you for joining us. And you may now disconnect your lines. Thank you.