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Nestle India Q4 Results: Revenue, profit beat estimates; JV announced with Dr. Reddy’s Laboratories
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Summary
The board of Nestle India has also approved dividend of ₹8.5 per share.
Nestle India Ltd. reported revenue growth of 9.1% during the January-March period. The ₹5,268 crore figure was slightly higher with expectations of ₹5,180 crore, according to a CNBC-TV18 poll. It was the first instance of Nestle India’s domestic sales crossing the ₹5,000 crore mark.
Net profit for the period also increased by 27% year-on-year to ₹934 crore. A CNBC-TV18 poll had pegged the figure at ₹850 crore.
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) stood at ₹1,337.7 crore, registering a growth of 21.8% from the year-ago period and was higher / lower than the ₹1,265 crore expectation.
EBITDA margin expanded by 270 basis points from last year to 25.4%. Last year, Nestle India reported a margin of 22.7% during the same quarter. The margin was also 100 basis points higher than the CNBC-TV18 estimate of 24.4%.
“If you focus purely on earnings, I think it’s very impressive. Margins of 25% plus, definitely, for a base like this, for a player like this with a scale like this, it’s definitely very good,” said Prakash Diwan, Market Expert. ”
Nestle India has entered into a Joint Venture with Dr. Reddy’s Laboratories for investing in Dr. Reddy’s Nutraceuticals Ltd.
The Joint Venture will see Nestle India hold a 49% stake and also have a call option to increase the shareholding after six years at a fair market value. Even after Nestle India exercises the Call Option, Dr. Reddy’s will continue to hold no less than 40% stake in the JV.
Here’s how Nestle India’s various business segments have fared:
- Beverage: Robust performance with Nescafe introducing its coffee to over 30 million households across India in seven years.
- Milk Products and Nutrition: Strong growth despite inflationary pressures.
- Prepared Dishes and Cooking Aids: Strong growth across portfolio led by Maggi Noddles and Maggi Masala-Ae-Magic. India is now the world’s largest market for Maggi globally.
- Out-of-Home: Strong growth with e-commerce now contributing to 6.8% of overall sales.
- Exports: Delivered good growth with Maggi noodles and sauces witnessing increased demand in key markets like Canada, the US, Australia, New Zealand and Singapore. Nescafe Sunrise continued to gain traction in established markets like Singapore and Taiwan, while also being exported to Canada for the first time.
Nestle India’s board has also approved a dividend payout of ₹8.5 per share.
“What we have seen with Nestle is that Nestle is a company, which has a very strong product profile, they have been able to consistently churn out, improve their product profile, and ride the premiumisation trends in India very strongly,” said Naveen Kulkarni of Axis Securities. “I think that Nestle is in a very strong position, and they should be able to address these issues (Cerelac) very well and manage their long term growth trajectory at a reasonably strong pace,” he added.
Shares of Nestle India have given up gains post the earnings announcement and are currently trading flat at ₹2,499. The stock has risen 22% over the last one year and also had a 1:10 split recently.
This is a developing story.
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