Nestle India to announce Q1 earnings today, profit expected to rise

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26 Aug, 2025 12:21

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FMCG company Nestle India is expected to report 8-16 percent year-on-year in March quarter profit due to lower tax cost and higher revenues.

Provisioning of taxes is expected to be at 25.17 percent for the quarter against 33.4 percent in Q1CY19 taking account of reduced corporate tax.

Revenue from operations may increase in the range of 5-8 percent for the quarter compared to same period last year, affected by COVID-19-led nationwide lockdown in more than a week towards March-end.

The company follows January-December as its financial year.

"We expect Nestle to post 7.7 percent growth in sales due to lockdown in the last eight to 10 days of the quarter. Though FMCG companies, dealers, retailers are allowed to work during the lockdown, labour & transportation shortage has impacted the manufacturing & logistics," said ICICI Direct which expects profit to witness 16 percent growth during the quarter mainly due to a steep decline in the corporate tax rate in FY20.

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The company has been on a fast-growing trajectory in the last six to seven quarters due to extensive new launches. However, channel check suggests big supply chain & manufacturing disruption in the last week of March, it added.

According to Narnolia Financial Services, Nestle's Q1CY20 revenue is expected to grow by 5 percent YoY impacted by factory shut down and disruption in distribution channels due to government directive over COVID-19.

At operating level, the company may report weak growth due to higher milk prices during the quarter.

"We model continued gross margin contraction on the back of inflationary raw material (mainly dairy). We expect this impact to flow to the EBITDA level (down 1 percent YoY) as well," said Kotak Institutional Equities which expects EBITDA margin to contract by 156 basis points.

Narnolia feels the company's gross margin is expected to decline by 203 bps YoY to 56.5 percent due to inflation in input prices especially in milk and its derivatives. "EBITDA margin is expected to decline by 284 bps YoY on the back of higher employee and other expenses as percentage of sales."

Commentary on manufacturing and logistics status, demand environment due to COVID-19 and new product pipeline will be closely watched.

The stock shot up 70 percent in the last one year, while it gained nearly 19 percent year-to-date (2020) and was up 10 percent during the quarter ended March 2020.

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