Nestle India Q3 Results: Revenue Rises 10% As Demand Improves

Nestle India Ltd.’s net sales rose on improving demand in the first full quarter of operations after India eased lockdown curbs and factories limped back to normal capacities.

Revenue of Nestle India—which follows January-December fiscal—increased 10% over the year ago to Rs 3,541.7 crore in the quarter ended September, according to its exchange filing. That compares with the Rs 3,442.6-crore consensus estimate of analysts tracked by Bloomberg.

The maker of Maggi noodles and Kit Kat chocolate, however, saw its profit decline 1% year-on-year to Rs 587 crore. The estimate was Rs 573.2 crore. The bottom line fell because the profit was boosted in the year-ago quarter after India cut corporate tax rates.

The company’s operating profit rose 15% year-on-year to Rs 883.5 crore. Analysts had pegged it at Rs 845.8 crore. Its margin expanded to 24.9% from 23.8% a year ago.

Nestle India’s brands like Maggi noodles and sauces, Kitkat, Nestle Munch, Nestle Classic and Nescafe sunrise witnessed double-digit growth in the quarter, Suresh Narayanan, chairman and managing director, said in the statement. “Demand in ‘out-of-home’ channels improved during the quarter but continues to be impacted due to the overall environment.”

Narayanan said sales through its e-commerce channels almost doubled in the quarter and now contributes to 4% of Nestle India’s domestic sales.

Demand for consumer goods makers improved after the nation—fighting a rare recession—restarted most activities to boost sentiment and growth. While a complete recovery is some time away, Nestle India’s peers Hindustan Unilever Ltd. and Britannia Industries Ltd. also reported an increase in demand. Still, Britannia indicated that though the government has ended lockdown, the situation will take a while to normalise. Distributors also told BloombergQuint that the pent-up demand is tapering off.

For Nestle India, domestic sales rose 10.2% over the year ago at Rs 3,350.1 crore in the quarter ended September, while its exports rose 9.4% at Rs 160.2 crore.

The company plans invest Rs 2,600 crore over the next three to four years to expand its existing manufacturing capacities and start a new factory at Sanand, Gujarat, the company said.

The board of directors declared an interim dividend of Rs 135 per equity share for 2020.

Shares of Nestle India closed 0.3% lower before the quarterly results were announced compared with a 0.3% gain in the benchmark Nifty 50 Index.