Packaged food major Britannia Industries is doubling down on premium products and expanding beyond biscuits as it seeks to sustain growth in a highly competitive market.
A new report by Antique Stock Broking initiates coverage on the company with a ‘Buy’ rating and a target price of Rs 7,000, citing strong growth potential driven by premiumisation, expansion into adjacent food categories and deeper distribution in underpenetrated markets. This implies 18% upside from current levels.
The brokerage sees Britannia positioning itself as a “total food company” while maintaining leadership in its core biscuit business.
Premium biscuits remain the backbone
Britannia’s strategy is centred on upgrading its core biscuit portfolio toward premium offerings, according to the report. Premium products now account for roughly 65–70% of the company’s sales, significantly higher than many industry peers. The shift has been driven by new product launches and a focus on value-added offerings under brands such as NutriChoice and Pure Magic, the report added.
At the same time, Britannia has increased the use of low unit packs (LUPs) priced at Rs 5– 10 to make premium products more accessible to price-sensitive consumers. These packs now contribute around 60% of total sales, compared with about 40% in 2019, as per the Antique Stock Broking report.
Expansion beyond biscuits
Britannia has also been expanding into adjacent categories such as dairy, cakes, croissants, wafers and rusk as part of its effort to diversify its product portfolio. These segments currently contribute about 25% of the company’s revenue, but management aims to increase their share to around 50% over the medium term, the report added. Many of these categories remain low in penetration and largely unorganised in India, thereby it presents a long-term growth opportunity for branded players.
The company has already seen traction in several adjacencies. For instance, it has built scale in the wafer cream segment, estimated at about Rs 10 billion in FY24 and growing at roughly 25% annually, while croissants developed in partnership with Chipita have gained consumer traction nationally, the Antique Stock Broking report added.
In dairy, Britannia’s Winkin’ Cow brand has expanded rapidly since its launch, helping the company build a presence in milk-based beverages and cheese products. Dairy revenue stood at about Rs 5.25 billion in FY25, accounting for roughly 3% of consolidated sales, as per the report.
Distribution expansion driving market reach
A major driver of Britannia’s growth has been its expanding distribution network. The company’s direct reach has increased from about 0.7 million outlets in FY14 to around 2.9 million outlets in FY25, adding roughly 200,000 outlets annually on average.
Britannia has also expanded its Rural Preferred Dealer (RPD) network, which covers smaller towns and villages. The number of such dealers has grown sharply from around 7,000 in FY15 to nearly 31,000 in FY25, the Antique Stock Broking report stated. Despite this expansion, there remains considerable headroom in the Hindi belt, which accounts for around 35% of industry volumes but only about 15% of Britannia’s sales.
Manufacturing scale and efficiency
According to the report, the company has increased its in-house manufacturing share to about 65% in FY25, up from 25% in FY11, and plans to take this to roughly 70% over time to reduce dependence on contract manufacturing.
Larger production facilities, including mega food parks such as the Ranjangaon plant in Maharashtra, have helped improve operating efficiency and scale. The Antique Stock Broking report further added that shifting towards bigger plants has increased average factory output to as much as 20,000 tonnes per month when compared to 1,800 tonnes per month earlier.
These changes have also shortened supply chains, reducing average lead distances from around 650 km earlier to about 320 km, improving product freshness and lowering logistics costs.
Growth outlook remains steady
Britannia’s revenue has grown at an 8% compound annual rate between FY15 and FY25. According to the brokerage, the company is expected to maintain steady growth, forecasting revenue to expand at around 9–10% annually between FY25 and FY28.
Antique Stock Broking further believes that profitability will improve. According to the brokerage, the company’s operating margins will stay strong at around 18–19% between FY26 and FY28, helped by better efficiencies and stable raw material costs. It also estimates that revenue, operating profit and net profit will grow at about 11%, 14% and 15% per year, respectively, between FY25 and FY28.
Risks remain
Despite the growth outlook, the report flags several risks. These include rising or unpredictable raw material prices or slower demand if consumers cut spending due to tight household budgets. The brokerage also flagged a risk from strong competition from both large and regional brands, and the company’s efficiency in managing a vast distribution network.
Changes in food regulations, taxation policies and supply-chain disruptions could also impact the company’s operations and profitability.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.