Brokerage houses Nuvama and Nomura have however retained their ‘Buy’ ratings on the fast-moving consumer goods (FMCG) stock following the Q4FY26 results.
Near-term concerns Vs long-term opportunity
Nuvama has maintained a ‘Buy’ rating on Britannia Industries, though the brokerage said it will revisit its estimates and target price after the earnings conference call. However, as of now, the brokerage has set a target price of Rs 7,530 for the stock. This translates to an upside potential of 30% from the current market price
Nomura has also retained a ‘Buy’ rating on the stock with a target price of Rs 7,275. This implies an upside potential of nearly 26% from the current market price.
According to the brokerage reports, Britannia’s core business continues to see support from premium products, innovation and growth in adjacent categories. However, rising costs, weaker operating leverage and supply disruptions linked to the West Asia conflict have become near-term concerns.
Let’s take a look at what the brokerage houses are saying about the biscuit and packaged food major and what is driving their cautious optimism despite the sharp correction in the stock.
Nuvama on Britannia Industries
Nuvama believes Britannia’s long-term growth drivers remain intact, though the latest quarter indicated pressure on margins and slower growth momentum toward the end of the quarter.
- Growth slows after strong start to the quarter
According to the Nuvama report, Britannia started the quarter on a healthy note before growth moderated sharply in March.
The brokerage stated, “The business witnessed 9% growth during Jan-Feb; however, growth lowered in March due to supply disruptions in the International Business following the West Asia conflict.”
As per the brokerage report, the company reported Q4FY26 revenue growth of 6.5% year-on-year, broadly in line with expectations but lower than Street estimates.
The company’s Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) rose around 6% year-on-year, but margins remained under pressure because of rising expenses.
Nuvama noted, “EBITDA margin stood flat YoY at 18.1% and contracted 189bps QoQ.” The brokerage also highlighted that other expenses rose 17.5% year-on-year during the quarter.
- Premiumisation and innovation remain key themes
Nuvama believes Britannia continues to focus on premium products and new launches to support future growth.
According to the brokerage report, categories such as croissants and wafers maintained strong momentum during the year. The brokerage also said brands like Little Hearts and Jim Jam delivered strong double-digit growth.
Nuvama added, “Recent innovations like 50-50 Dipped and ‘Doodh’ Marie Gold are gaining healthy market traction.”
The brokerage also highlighted that e-commerce is becoming an important growth channel for the company. According to the report, online platforms now contribute nearly 6% to Britannia’s domestic business.
Nomura on Britannia Industries
Nomura has also retained a positive long-term stance on the stock, though the brokerage said the latest quarterly performance came below expectations.
- Margins disappoint despite gross margin expansion
According to the Nomura report, Britannia’s consolidated sales growth of 6.5% year-on-year remained below both brokerage and consensus estimates.
Nomura stated, “Results below our and consensus estimates.”
The brokerage noted that volume growth was likely around 4% year-on-year, lower than its earlier expectations of 6% growth.
While gross profit margin expanded nearly 200 basis points year-on-year to 42.1%, operating profit margin weakened because of rising employee and operating costs.
Nomura stated, “OPM contracted by 10bp YoY (-190bp q-q) to 18.1%, below our forecast.”
The report also noted that EBITDA growth came in much weaker than expected.
- West Asia conflict and competition remain key concerns
Nomura highlighted that Britannia’s international business was impacted by supply disruptions linked to the West Asia conflict.
According to the brokerage report, growth during March slowed sharply after a relatively stable first two months of the quarter.
The brokerage stated, “It then moderated lower in March, primarily on account of supply disruptions in the International Business following the West Asia conflict.”
Nomura also flagged concerns around competitive pricing in the biscuit segment and uncertainty over whether disruptions in the international business have fully normalised.
The brokerage has retained its target price of Rs 7,275 and expects earnings per share growth compound annual growth rate of around 11% over FY26-FY28.
What investors need to know
According to the brokerage reports, Britannia Industries continues to face near-term challenges from rising costs, weaker operating leverage and disruptions in international markets.
However, both Nuvama and Nomura continue to remain constructive on the stock’s long-term outlook due to factors such as premiumisation, product innovation, expansion in adjacent categories and steady growth in e-commerce channels.
For investors, the upcoming management commentary and future margin trajectory are likely to remain the key factors to watch in the coming quarters.
Disclaimer: The information provided above includes specific stock recommendations, ratings, and target prices from third-party brokerage houses. These views do not represent the editorial stance of this publication and should not be construed as investment advice or a solicitation to buy or sell securities. Investing in the equity market involves significant risk; please consult a SEBI-registered investment advisor before making any financial decisions based on these projections.
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