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A stronger core, a wider runway

We met Mr. Rakshit Hargave, CEO and MD of Britannia Industries (BRIT), to discuss the company's growth strategy, portfolio opportunities, and profitability outlook.

* BRIT's growth strategy remains anchored on unlocking the significant headroom within its core biscuit portfolio. Mr. Hargave highlighted that there are huge untapped opportunities across both large established brands (Good Day, Marie, etc.) and smaller high-growth brands (such as Jim Jam and Little Hearts). BRIT historically underinvested in its cash-cow biscuit brands. However, it has now increased its focus on brand extensions with greater premiumization to extract more value from the core.

* Premiumization is emerging as a key growth and margin lever, with opportunities across biscuits and adjacent categories. Management sees potential to launch premium products under established brands, move consumers from LUPs (particularly INR5 packs) toward larger packs, and introduce products with higher price points. The NPD pipeline remains strong.

* Smaller brands offer an incremental growth opportunity. The ~INR15b small brands portfolio, including Jim Jam, Little Hearts, and other emerging brands, is growing at ~30% YoY, and management sees potential to scale it to ~INR30b over the next three years. These brands also have a superior margin profile.

* Recent demand trends have remained resilient, with a strong exit from 1QFY27. Volume growth stood at 9% in 1QFY27. BRIT indicated that the double-digit sales growth witnessed in June has continued into 2Q as well. BRIT mitigated only ~50% of 1Q inflation through pricing, primarily via shrinkflation. The company has taken a further 2-3% price hike in 2Q.

* Health & wellness represents a significant whitespace opportunity, with the company evaluating everyday-consumption products across sugar-free, protein rich, diabetic, women, and adult-focused segments. The NutriChoice brand already has strong brand equity, which BRIT can leverage as an established platform to build the category.

* Over the medium term, BRIT expects its revenue share from adjacent categories to improve from the current ~25% to 30-35%.

* QC is becoming an increasingly important growth engine. It already accounts for 80–85% of overall E-com sales and is growing ~50%, with management expecting this pace to continue and targeting FY27 ARR of ~INR20b. The company is developing separate QC-centric portfolios, with the channel skewed toward larger packs, impulse purchases, and adjacent categories rather than the INR5/INR10 packs prevalent in General Trade.

* International expansion offers an additional growth and margin opportunity. International currently contributes ~5% of sales, with management targeting 8-9% going forward. Many existing geographies offer significant headroom for scaling (particularly the US, which is highly profitable).

* BRIT remains open to suitable JVs and inorganic growth opportunities across both its domestic and international markets. The company remains mindful of inorganic opportunities and will closely track portfolio suitability and valuation.

* BRIT is targeting healthy double-digit revenue growth with modest margin expansion in the coming years. Commodity inflation and geopolitical uncertainties remain near-term monitorables as they can weigh on nearterm margins. It expects pricing actions alongside continued cost optimization to protect margins. Healthy double-digit growth across adjacent categories and rapid expansion of alternate channels will provide additional growth levers. We expect earnings growth to strengthen as pricing actions, improving channel mix, and execution under the ‘Many Indias’ strategy offset cost headwinds. We model revenue/EBITDA/PAT CAGR of 11%/13%/14%, over FY26-29E and reiterate our BUY rating with a TP of INR6,500, based on 45x Sep'28E EPS.

Significant headroom within existing core biscuits brands

* Management believes BRIT's core biscuit portfolio remains under-indexed, with substantial opportunity to grow both consumption frequency and wallet share within existing brands.

* Premiumization is a key component of BRIT's strategy, with management seeing an opportunity to leverage established brands to introduce differentiated products at higher price points. This can support both revenue growth and margin expansion. Thus, there remains room for further scaling through more premium offerings, brand extensions, and larger pack formats.

* The company aspires to shift the mix from INR5 packs to larger packs, which will improve consumer recall while supporting premiumization.

* Moreover, BRIT aspires to expand biscuit consumption beyond the traditional morning and evening occasions. Around 70% of biscuit consumption is concentrated in these two occasions, leaving significant scope to create new consumption occasion.

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