Britannia’s stock looks rich—but is the upside baked in?

Britannia Industries delivered a solid Q4 FY25 performance, posting an 8.9% year-on-year (YoY) rise in revenue from operations. But while the business fundamentals remain steady, the stock’s recent rally—up 14% in the past three months—has taken its price-to-earnings (P/E) multiple to 60x, well ahead of its five-year average of 49x.

At its current price of ₹5,485 (May 29), the valuation has prompted caution among analysts. Amit Purohit of Elara Securities notes that Britannia is already trading at 50x estimated FY27 earnings, implying the market has likely priced in much of the company’s medium-term growth potential.

That’s not to say the company isn’t executing well. Operating margin in Q4 stood at a healthy 18.2%, supported by calibrated price hikes to counter rising input costs. For instance, inflation in key raw materials—particularly oils and fats—remained elevated at 17.4%, up 500 basis points from the previous month. The company, however, appears agile in its response.

“We’ve already taken significant price hikes last quarter and may raise them again if inflation persists,” Varun Berry, Managing Director and CEO, said in a post-earnings analyst call. “But if input costs soften, we may not need to act. Even if costs rise, we’re ready to adjust pricing smartly to protect profits,” he elaborated.

On the growth front, Britannia’s distribution footprint expanded to 2.9 million outlets in FY25. E-commerce, while still a small base, contributed 4% to overall sales—growing 7.4x faster than other channels. Rural distribution also saw modest expansion with 31,000 distributors, up from 30,000 the previous year.

Berry highlighted innovation and premiumisation as strategic levers going forward. The company launched 60 new SKUs this year—its highest ever—and continues to revamp its route-to-market. “At the top end, we get depth; at the bottom end, we get width,” he said. “We’ll do it in a way that the revenue we get is as profitable as our revenues today.”

In that context, Purohit acknowledges the company’s operational discipline, even as he flags valuation concerns. “Britannia has been leveraging its distribution initiatives and cost management to improve its margins consistently,” he told Fortune India. “We believe a reduction in vegetable oil prices could further support margins, though some of the input cost benefits may be passed on.”

As things stand, Britannia’s fundamentals remain strong. But at 60x earnings, the bigger question for investors is this: how much of the biscuit is already priced in?