How Britannia Turned a GST Disruption into a 3QFY26 Comeback

In October, the familiar ₹5 and ₹10 packets of Britannia’s Doodh Marie suddenly felt unfamiliar. The biscuits were same, but the pack wasn't. A GST rate cut had nudged companies into a "packaging-and-price" transition, which immediately caused a dip in its sales number.

However, when the dust settled in November–December, two things worked in its favour: a stabilising cost environment and a pricing reset across the biscuit segment. And the company started to regain its footing.

The 'Good Day'-maker reported a 17% year-on-year rise in its consolidated net profit of ₹682 crore for the third quarter of FY26, as compared to the ₹582.3 crore during the same quarter last financial year. Its consolidated revenue also came in at ₹49.2bn, up 7.2% year-on-year, and volume growth was about 4.5–5%.

The number is better than what many analysts expected, especially given that October was disrupted by the GST transition. Management indicated that November–December sales growth accelerated to around 12%, driven equally by volume and realisations, and importantly, without channel stuffing.

Pricing Reset & Margin

The pricing reset matters here. Roughly 60–65% of Britannia’s portfolio centred around the ₹5 and ₹10 price points. After the GST-led grammage changes, Britannia moved back to the traditional ₹5/₹10 packs. While Britannia transitioned earlier to the higher grammage/old MRP regime (two-thirds of industry comprising ₹5/10 packs).

However, some of the other players held on to odd MRP points of ₹4.45/8.9, gaining volumes in some regions as the retail channel pocketed the small-change amounts (vs ₹5/₹10 respectively) from sale of those brands. With the industry largely expected to shift back to the old MRPs by end of Q4 FY26, the 'Good Day' Biscuit maker indicated an expectation of regaining some volumes.

Gross margin expanded 400 basis points year-on-year to 42.7%, helped by easing input costs. Refined palm oil prices were down 9% year-on-year, cocoa down 12%, and laminates down 6%, though milk prices remained elevated. Operating margin rose to 20%, up 320 basis points year-on-year. Adjusted PAT grew 34.8% year-on-year to ₹6,828mn.

This is significant because Britannia has not always had the luxury of benign commodities. The 20% operating margin marks a return to the upper end of its historical band. Nomura expects margins to sustain at these levels in the near term, even as the company budgets for higher advertising and brand investments.

Reinvestment

The new MD & CEO, Rakshit Hargave, has laid out clear priorities. First, double down on e-commerce and quick commerce. Currently contributing high single digits to revenue, management wants this channel to scale to early-to-mid teens by FY27.

Quick commerce, now present in over 250 cities, is particularly attractive for impulse and indulgence categories. Britannia plans to launch more digital-first brands to capture this shift.

Second, accelerate innovation. The quarter saw launches such as the 50:50 dipped range, ‘Veg’ variants of brownies and layer cakes, and Doodh Marie Gold. Adjacencies — cakes, rusk, croissants, wafers — are growing in double digits, and in e-commerce, these categories are nearly three times the size of biscuits.

Dairy remains a mixed bag: cheese growth is slow, though milk drinks and ghee are performing better. Third, expand platforms — even inorganically. Management has signalled openness to acquisitions to stay relevant and broaden the portfolio.

Outlook

In terms of growth for the next few quarters, Nomura sees volume growth rising to high single digits in 4Q as price-point competition stabilises. Systematix believes topline growth could move into the low double digits over the next three quarters, helped by GST-driven realisations and grammage changes.

On the margins front, the commodity backdrop remains supportive. Wheat prices are expected to remain favourable if crop output holds up. Nomura expects gross margin improvement to continue sequentially in 4Q, with operating margin sustaining around 20% despite stepped-up brand spends. Systematix, however, builds in only modest margin expansion over FY26–FY28, factoring in higher investments.

Financially, the street now builds in revenue growth of around 7–9% annually over FY26–FY28, with EPS growth in low double digits, according to Nomura. The company remains net cash and continues to generate strong free cash flow.

Yet risks remain. A flare-up in input costs, weaker traction in new launches, or sharper competitive intensity could temper this recovery.