Nestle India Q2 Review - Sales Below Estimate; Gross Margin Pressure Evident: Motilal Oswal
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Motilal Oswal Report
Nestle India Ltd.'s sales growth of 14% YoY in Q2 CY21 was lower than our expectation (up 17%), given the weak base in Q2 CY20 (up 1.7% YoY sales growth).
Two-year average sales growth slipped to 7.8%, lower than the 9-10% range seen in the preceding three quarters.
Rising palm oil and packaging costs led to lower than expected operating margin, resulting in a 5-6% miss to our Ebitda and profit before tax estimate.
Nestle India indicated in its press release that it has already invested Rs 10 billion of the Rs 26 billion capex program it had indicated earlier (planned over three to four years).
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