Nestle India March Quarter Results Review - Decent Beat On Both Growth Margins: Systematix

Systematix Research Report

Nestle India Ltd. delivered a marginal beat on topline and a strong beat on Ebitda and profit after tax with revenue/Ebitda/profit after tax growth of 9%/22%/24%. Reported growth was broad-based across key brands, with volume growth of ~3% as per our estimate with strong contribution from pricing and mix.

Domestic sales grew 8.9% YoY led by strong growth in core brands, targeted brand spends and traction in alternate channels like Out of Home, e-commerce and rurban markets.

Gross margins improved sharply by 300 bps with moderation in raw material prices and continued premiumisation which flowed through to Ebitda which improved 270 bps YoY to 25.6%.

The core brands seem to be responding well to the marketing and distribution initiatives of the company and strong execution is visible on the OOH and rurban initiatives.

The innovation pipeline continued to churn out new launches under Maggi, Milk products and nutrition and Confectionary. Launch of Nespresso and joint venture with Dr. Reddy’s Laboratories Ltd. for nutritional health solutions should further strengthen the product portfolio.

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