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Nestle India - Q1CY22 First Cut - ICICI Direct

Posted On : 2022-04-22 10:58:26( TIMEZONE : IST )

(CMP - Rs. 18275, MCap - Rs. 1,76,201 crore)

Nestlé India's results were in line with our estimates on the revenue front and below our estimates on the operating profit and earnings front.

Q1CY22 Earnings Summary

- Revenue witnessed growth of 10.2% to Rs. 3980.7 crore (I-direct estimate : Rs. 3987.8 crore) led by pricing growth in milk products, coffee & Maggi noodles. The growth was also aided by volume growth in Maggi noodles & double digit value growth In chocolates & coffee. The aggressive media campaign also supported growth in the Maggi noodles & chocolates business

- However, Maggi sauce & Masala ae Magic growth was impacted by high base & shift from 'at-home' consumption to normalisation of out of home activity. Milk product sales continue to remain impacted by high competitive activity

- With the sharp commodity inflation in milk, edible oil, coffee and wheat, gross margins have contracted 313 bps. The company was able to save 23 bps and 70 bps (as percentage of sales) in Employee & overhead spends, respectively. Operating profit was flat at Rs. 924.7 crore (I-direct estimate : Rs. 984 crore) and operating margins contracted 254 bps to 23.2%. Net profit was down 1.3% to Rs. 594.7 crore (I-direct estimate: Rs. 629.4 crore)

- E-commerce sales continued to accelerate aided by new formats like 'quick commerce' and 'click & mortar'. Organised & modern trade channel sales recovered with normalisation of out of home actively

- The company declared an interim dividend of Rs. 25/share

Nestlé India continues to witness strong growth in Maggi Noodles after commissioning of the Sanand factory. Further, larger part of the growth has been contributed by price growth in Maggi noodles, coffee and milk products. Most FMCG companies have been facing high commodity inflation in the last six to eight months. Though FMCG companies are taking aggressive price hikes, the hikes are only partially passing on commodity inflation. Inflation has also adversely impacted demand in semi-urban & rural regions. Though we believe commodity inflation would cool down in the longer run, the next few quarters would continue to remain challenging for FMCG companies from both volume growth and margin perspective.

We will be coming out with the detailed update soon.

Shares of Nestle India Limited was last trading in BSE at Rs. 18205.80 as compared to the previous close of Rs. 18313.70. The total number of shares traded during the day was 4590 in over 1770 trades.

The stock hit an intraday high of Rs. 18572.95 and intraday low of 17772.90. The net turnover during the day was Rs. 83217542.00.