Nestle India continued its strong sales growth in Q3 CY20 aided by strong sales in MAGGI and Nescafe coffee.
"Growth was driven by an improved supply situation as factories returned to normal output. Boosted by an increase in home consumption, key brands like MAGGI Noodles, MAGGI Sauces, KITKAT, Nestlé MUNCH, NESCAFÉ CLASSIC and NESCAFÉ SUNRISE witnessed double-digit growth," said Suresh Narayanan, its Chairman and Managing Director.
According to analysts, demand for out of home channel improved but still remains impacted by COVID.
The COVID-19 outbreak has given a boost to products in the ready-to-cook meals category and companies selling them have made most of it.
Nestle’s Q3 revenue increased 10.1 percent year-on-year to Rs 3,541.7 crore, with domestic sales growth of 10.2 percent led by volume mix, while exports rose by 9.4 percent YoY.
However, the company registered a 1.4 percent year-on-year decline in profit on higher tax cost, but revenue and operating income grew in double-digits.
It continued its strong performance in e-commerce, which grew by 97 percent and now constitutes about 4 percent of domestic sales.
According to Himanshu Nayyar, Lead Analyst - Institutional Equities, Yes Securities, the company’s gross margin improved by 60 bps to 58.1 percent led by lower milk prices despite a relatively inferior mix. "EBITDA margin improved by 110 bps to 24.9 percent led by reduction in overhead costs due to restricted operations, partially offset by higher incentives offered to production manpower," it said.
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