Kickstarting earnings season for the FMCG universes, Maggi and Kitkat maker Nestlé India is expected to post double-digit revenue and profit growth in the March quarter. The company will come out with its results on April 25.
According to an average of estimates of brokerages polled by Moneycontrol, revenue will rise 5.5 percent on a sequential basis and 12.8 percent year-on-year to Rs 4,491 crore. Net profit is expected to grow 13.4 percent from a year ago to Rs 674 crore in Q1.
The company follows a January to December financial year.
Like previous quarters, this quarter too revenue growth is expected to come entirely on the back of price hikes taken by the company. This, in turn, will affect volume growth for the FMCG major.
“Volume (tonnage) is likely to decline marginally, owing to continued share loss in Maggi Chotu packs as it increased price point to Rs 7 from Rs 5, whereas ITC Yippee! has maintained price at Rs 5,” noted analysts at Kotak Institutional Equities.
During the last quarter’s earnings con-call, Nestle India MD Suresh Narayanan had flagged off-market share loss in the low unit pack noodles category. Overall volume for Nestle India was the lowest in Q4 CY22 at 126,000 tonnes, compared to 148,000 tonnes in Q3, and 138,000 tonnes in Q2 and Q1 each.
As per Jefferies’ estimates, volume growth could come at 3 percent YoY in the quarter compared to 4 percent in the previous quarter.
On the operating performance front, analysts have pegged the EBITDA margin at 23 percent, more or less flat sequentially as well as year-on-year. Deflation in edible oils will be offset by high inflation in wheat and dairy products coupled with higher ad spends, they said.
Also Read: FMCG shows no sign of recovery in rural demand, muted volume growth on cards in Q4
Milk and milk products, which is the biggest contributor to the company’s topline, is expected to see moderate sales. The confectionary segment, on the other hand, will continue its strong momentum. The stock is currently trading 3 percent below its 52-week high and commands a price-to-earnings ratio of 82x.
Factors to watch: Any commentary on the milk and nutrition segment, commentary on demand and material costs, and outlook on competitive intensity.
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