Nestle India Q1 Results: Profit Rises On Lower Taxes, Sales Growth

Nestle India Ltd.’s quarterly profit rose as lower corporate tax rates helped the maker of Maggi instant noodles and KitKat chocolates.

Profit rose 13.4 percent over the previous year to Rs 525 crore in the quarter ended March, according to the company’s exchange filing. That’s slightly higher than the Rs 512 crore estimated by analysts tracked by Bloomberg.

The company had previously switched to the lower corporate tax rate regime announced by Finance Minister Nirmala Sitharaman in September 2019. Nestle India paid 24 percent lower taxes during the quarter at Rs 1,849.6 crore. That has positively impacted the profit, the filing said.

• Revenue, too, came out higher than estimates. The topline grew 10.7 percent year-on-year to Rs 3,325 crore—higher than the estimated Rs 3,098 crore.
• Operating profit rose 5.3 percent to Rs 793 crore.
• Operating margin, however, narrowed 130 basis points to 23.8 percent.

The consumer goods maker reported higher input costs, mainly in its dairy segment. Nestle said that even during the Covid-19 pandemic the company continued to procure dairy from all its 1 lakh farmers and ensured timely payments.

Raw material costs, too, rose 22.8 percent over the previous year to 1,484 crore.

However, sales growth remained in double digits. Domestic sales increased 10.7 percent to Rs 3,124 crore driven by volumes and product mix, Nestle said. Exports rose 13 percent to Rs 181 crore.

“Maggi, KitKat and Nestlé MUNCH delivered strong performances. Contribution from e-commerce went up significantly, while out of home sector performance was subdued,” Nestle India Chairman and Managing Director Suresh Narayanan said in a statement. “Commodity prices for milk and its derivatives continued to be on the rise during the quarter.”

Shares of Nestle India closed 0.6 percent lower, ahead of the earnings annoucement, tracking the benchmark BSE Sensex that ended trade 0.6 percent down.