FMCG company Nestle India is expected to report double-digit growth in the bottom line as well topline with a high single-digit increase in volume for the quarter ended March 2021 compared to a year-ago period.
The sustainable growth in Maggi, infant foods, chocolates segments etc is likely to boost business, brokerages feel.
"Nestle is likely to report 10.8 percent revenue growth with sustainable growth in Maggi noodles. Moreover, new products launches & distribution expansion in rural regions are also aiding growth," said ICICI Direct which expects net profit to grow by 11.8 percent year-on-year (YoY).
The company was able to grow at a slower pace at 7.9 percent in CY20 despite strong growth momentum in packaged foods mainly due to supply constraints in the noodles segment. The brokerage believes Nestle would continue to witness moderate growth in March quarter 2021.
KR Choksey expects Nestle India to report revenue growth of 12.3 percent YoY in Q1 CY21 on the back of increase in demand for ready-to-eat products such as Maggi, Dairy products, KitKat and Coffee as well as volume led by growth from online delivery channels. The topline will also be backed by an increase in rural demand, said the brokerage.
According to Sharekhan, volume growth is expected to be in high single digits.
The company follows January-December as its financial year.
The stock has not seen major upside in the last 12 months as well as in the current year. It fell 7.3 percent in CY21 so far, and gained just 0.4 percent in the last one year period, against a 51 percent growth and 0.1 percent in Sensex in the same period respectively.
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At the operating level, Kotak forecasts 200 bps YoY expansion in gross margin on the back of price hikes, partly offset by rising milk prices. "We model 90 bps YoY expansion in EBITDA margin led by cost rationalization and operating leverage," said the brokerage which sees 12.6 percent YoY growth in EBITDA.
KR Choksey foresees an 84 percent increase YoY in EBITDA margin due to operational efficiencies undertaken by the company and reduction in variable expenses particularly ad spends offset by a rise in milk prices.
Key things to watch out for would be guidance on price and volume, capacity utilization levels, mix of segmental products, new product launches or innovations, and cost control initiatives, said the brokerage.