Nestle India Q4 Result: The news that Nestle India’s net profit for the December quarter increased by 4.4 percent year over year to Rs 655.6 crore caused a divided response from brokers.
In spite of projections, the FMCG giant’s operating revenue increased by 8.05 percent to Rs 4,600 crore. For the fourth quarter, Motilal Oswal had given an 11% growth forecast.
The Nestle India fiscal year runs from January to December.
Due to price and mix increases, as well as strong momentum in out-of-home and e-commerce channels, domestic sales increased by 8.9%. Increases in brand investments were seen throughout all product categories during the quarter.
The company crossed the Rs 19,000-crore threshold in 2023, with total sales growing by over 13.3%.
According to Jefferies, product price increases drove the revenue growth. At 58.6 percent, the gross margin reached a 12-quarter high and increased by 370 basis points from the same time last year.
Jefferies maintained its “hold” recommendation on the shares, aiming for a price of Rs 2,475 per share.
Uneven rains affected the price of maize, sugar, oilseeds, and spices. On the other hand, the costs of rice, wheat, and milk did not change. After hitting 54% in CY22, Motilal Oswal projected a 57 percent gross margin for FY25 and FY26.
Additionally, Nestle India disclosed the Rs 79.8 crore slump sale of Nestle Business Services (NBS).
This will take advantage of the fact that NBS can offer the parent company of Nestlé a worldwide presence, as well as long-term scale, efficiencies, and technological advantages to Nestlé India while remaining separate. This does not appear to have anything to do with a change in royalty, according to Nuvama Institutional Equities.
According to Morgan Stanley, the margins were driven by strong pricing and lower input costs. Positive double-digit growth has been observed in the milk product and nutrition business. With a target price of Rs 1,981, the brokerage, however, kept its “underweight” call on the Maggi maker.
For the past few years, Nestle has been expanding its reach into untapped markets and building its foundation around its “RURBAN” strategy, which has resulted in widespread growth across all of its brands, according to Motilal Oswal.
Due to high valuations, the brokerage maintained its neutral rating with a target price of Rs 2,400 (based on 60x P/E Dec’25E).
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