Nestle India Q4 Preview | Profit to grow 58%, revenue seen 17% higher

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Nestle India is set to report its earnings for Q4 (October-December 2022) on February 16 during market hours. The company follows the calendar year for reporting its financial results.

According to a poll of brokerages conducted by Moneycontrol, revenue is expected to come in at Rs 4,395 crore, indicating a 17.5 percent on-year growth. Net profit is seen at Rs 611 crore, higher by 58 percent from Rs 386 crore in the same period last year.

Profit had taken a hit in the base quarter due to past service costs and contingency provisioning.

According to Kotak Institutional Equities, the Maggi and Kitkat maker’s revenue will be aided by price hikes and distribution expansion-led rural growth. It is also factoring in an 11.9 percent year-on-year growth in exports.

However, gross margins will be impacted by high inflation in dairy, even as edible oil prices have cooled down. As a result, Kotak expects EBITDA margin to contract 160 basis points year-on-year to 21.2 percent, due to gross margin compression and higher media investments.

Overall domestic volumes are expected to grow by 9 percent, believes Nuvama Research, as demand for noodles and biscuits remained more resilient than other categories during the quarter.

The stock is currently down 8.5 percent from its peak in October 2022. In an uncertain market, investors usually prefer defensive stocks, but high valuations have left some investors wary.

The Street will be watching out for management commentary on demand resilience, out-of-home consumption and performance in rural areas. During the previous quarter’s results announcement, the company had launched its Direct-to-Consumer (D2C) platform MyNestle, foraying into the fast-growing online channel. Thus, an update on that will also be keenly monitored.

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