Nestle India Q1 Results Preview: FMCG major likley to report 10% YoY growth in top line, margins may see contraction
However, they expect the margins to be under pressure on the back of higher raw material costs and it shall dip in the range of 90-110 basis points in the March quarter.
The growth momentum may continue for the fast-moving consumer goods (FMCG) major Nestle India, as several brokerages see profit and revenues to grow year-on-year (YoY) during the quarter ended 31 March, 2022.
However, they expect the margins to be under pressure on the back of higher raw material costs and it shall dip in the range of 90-110 basis points in the March quarter.
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Domestic brokerage firm Axis Securities expects revenues to see moderation on account of weak consumer demand, rural slowdown, and weak exports. The Q4 revenues shall grow marginally by 5.5 per cent to Rs 3,800 crore and profit by nearly 1.5 per cent to Rs 611 crore in YoY.
While the gross margins may see a contraction owing to higher RM (raw material) prices and adverse mix. Despite weak GM, EBITDA margin contract moderated due to cost rationalization, the brokerage said, expecting around a 100-bps dip in the margins.
Nestlé India is likely to witness 10.4 per cent revenue growth largely led by price hikes and small jump in volumes, another brokerage firm ICICI Direct Research said in its preview report.
“The company has taken price rise in Maggi and milk-based products to pass on steep commodity inflation. Price increases have impacted volume growth during the quarter. Inflation in milk, and wheat continues to impact gross margins,” the brokerage said.
“We expect a 205-bps contraction in gross margins in Q4. With some cost savings and reduction in ad-spend, the operating margin is expected to contract 110 bps partially offsetting gross margin pressure. We expect net profit growth of 4.5 per cent to Rs 629.4 crore,” ICICI Direct Research said.
According to YES Securities, both the top and bottom lines may grow by around 10 per cent in the fourth quarter of FY22 YoY. Profit may come at Rs 620.8 crore and revenue at Rs 3,971.9 crore in Q4.
Nestle should see top-line growth of 10 per cent on a base of 9 per cent growth, margins to improve QoQ with a strong mix, and limited RM (raw material) inflation, the brokerage said in its estimates.
A day before its earnings, the stock of Nestle India was up over 2.5 per cent to Rs 18415 per share on the BSE intraday during Wednesday’s session.
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