About the Company

Nestle India is a subsidiary of NESTLÉ S.A. of Switzerland. The products offered by Nestlè in India range across categories such as milk and nutrition, chocolates and confectionary, beverages and prepared dishes and cooking aids.

Some of the famous brands of the company are Nescafe, Nestlè Everyday, Sunrise, Maggi, Kitkat, Milkybar, Milkmaid, Nestea, Munch, Bar one, Polo and many more. Nestle is the market leader in various categories such as Infant Cereals (96.5%), Instant Pasta (65.2%), Instant Noodles (59.5%), White Chocolates and wafers (62.6%).

 

Q1 2022 Updates

Financial Results & Highlights

Consolidated Financials (In Crs)
Q1FY22 Q1FY21 YoY % Q4FY21 QoQ %

Sales

4002

3640 9.9% 3766

6.2%

PBT

806 811 -0.6% 507

58.9%

PAT 594 602 -1.3% 386

53.8%

 

Detailed Results:

  1. Total Sales for the company grew 9.9% YoY with domestic sales growth of 10.2%.
  2. Operating profit margin stood at 23%.
  3. Export Sales for the company grew -1% in Q1CY22.
  4. The company is announcing a interim dividend of Rs 25 per share, which will be paid along with the final dividend of Rs 65 per share approved in the AGM.
  5. Operating profit margin and net profit margin have risen 10 bps and 460 bps respectively QoQ.
  6. Other income decreased due to lower average liquidities, partly offset by higher yields. 
  7. The company’s ecommerce channel grew by 71% and now contributes to 6.3% of domestic sales.
  8. Despite covid wave 3 impact, OOH business posted better than expected resulting from channel opening and due to continuation of business led revenue acceleration.
  9. The company’s continued focus remains towards proliferation of Indian product portfolio in new markets, and channel expansion in United Kingdom and Australia. 
  10. Kitkat and Munch, both registered double-digit growth. Nescafe Classic and Sunrise also delivered double digit growth.
  11. The management commodity remains firm to bullish while costs of packaging materials continue to increase amid supply constraints, rising fuel ad transportation costs.

 

Analyst’s View:

Nestle has been one of the biggest players in the packaged foods space in India. They have a dominant market share in 7 out of their 8 major product categories. The company is growing at a rate of more than 10% in domestic sales in the last quarter. But export sales have been flat YoY. That’s a very good growth performance considering its size, category and market penetration. The chances of a meteoric growth and exponential returns from this company are difficult considering their restricted room to grow domestically given their size and market share in the country. Given the significant brand and pricing power that Nestle enjoys, the company should not be hit hard from the high inflation as other food processing companies. The company still has significant room to grow their revenues by increasing exports given that exports count for a small percentage of total sales. However, at the current high valuation, it is prudent to tame return expectations in the near term.

 


 

Q3 2019 Updates

Financial Results & Highlights

Standalone Financials (In Crs)

Q3FY19

Q3FY18 YoY % Q2FY19 QoQ % 9M FY19 9M FY18 9M% Change
Sales

2972.5

2652.5 12.06% 3006.4 -1.13% 11551.2 10369.1 11.40%

PBT

522.2 477.4 9.38% 671.8 -22.27% 2428.9 1839.3

32.06%

PAT

341.8 311.8 9.62% 446.1 -23.38% 1606.9 1225.2

31.15%

Detailed Results

    1. Total Sales for the company grew 12% YoY with domestic sales growth of 12%.
    2. Operating profit margin stood at 21%.
    3. In 9M19, the company showed sales growth of 11.4% with PBT and PAT rising 32% and 31% respectively YoY.
    4. Export Sales for the company grew 6.9% in 9M19 and accounts for roughly 7% of total sales. They remain subdued due to lower exports to UAE and Bangladesh.
    5. The company is announcing a final dividend of Rs 25 per share.
    6. Operating profit margin and net profit margin have risen 60 bps and 40 bps respectively.
    7. The company market share for various categories are:
      • Infant Cereal: 3%
      • Infant Formula: 5%
      • Tea Creamer: 9%
      • Instant Noodles: 1%
      • Instant Pasta: 9%
      • Chocolate and wafers: 9%
      • Instant Coffee: 5%
      • Ketchup & Sauces: 3%
    8. Net cash generated from operations came to Rs 2052 Cr in the year so far. This has been the highest figure for operating cash flow achieved by the company.
    9. The company had a good year so far with product launches of NESCAFE Ready-to drink cans, NESPLUS, MAGGI Baked Noodles, MAGGI Dip & Spreads, NESCAFE ESmart Coffee and EVERYDAY Chai Life.
    10. This also the first time that the company has crossed Rs 11,000 Cr in 9M revenues.

Analyst’s View

Nestle has been one of the biggest players in the packaged foods space in India. They have a dominant market share in 7 out of their 8 major product categories. The company is growing at a rate of more than 11%. That’s a very good growth performance considering its size, category and market penetration. The chances of a meteoric growth and exponential returns from this company are difficult considering their restricted room to grow domestically given their size and market share in the country. The company still has significant room to grow their revenues by increasing exports given that exports count for only 7% of total sales. However, at the current high valuation, it is prudent to tame return expectations in the near term.

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