The second-quarter volume growth was flat, impacted by weak rural demand, which is now growing slower than urban (versus two times urban growth last year), despite distribution expansion, the management told analysts during a post-earnings briefing on Thursday. This was exacerbated by an increase in competitive intensity as regional players re-entered the market with falling input prices, a trend seen in other categories as well.

Growth in focus states—Uttar Pradesh, Rajasthan, Gujarat and Madhya Pradesh—also moderated amid weak consumer sentiment, mainly in rural markets. However, the company managed to increase its market share in the states.

Britannia Industries has reduced prices by 1.5% from the peak level after increasing them by 22% during the inflationary environment, implying that the price growth is still above 20%.

The management is hopeful of a volume pickup in the second half as the pricing gap with regional players narrows. Yet, analysts expect Britannia’s volume growth and revenue growth to remain under pressure in the near term, amid heightened competition and a high base. However, margins are likely to sustain at higher levels with deflation in key commodities.

Gross margins should remain in the current range, although no guidance on Ebitda margin was shared during the analysts’ conference call.

Shares of Britannia Industries were trading 0.55% higher, compared to a 0.58% gain in the BSE Sensex at 10:45 a.m.

Of the 41 analysts tracking the company, 24 maintain a ‘buy’ rating, 12 recommend a ‘hold’, and five suggest a ‘sell’, according to Bloomberg data. The 12-month consensus price target implies an upside of 10.41%.

Here’s what analysts have to say about Britannia’s Q2 FY24 results: