Nestle India Ltd will report its December quarter financial performance today. The December quarter will be the fourth quarter for the company, which followed January-December.
Consumer goods manufacturers see a weak outlook as demand remained generally warm during the past Quarter. Demand from the festival season was lower than street expectations, while rural demand also did not accelerate quickly.
The December 2024 quarter presents continued challenges to demand for FMCG (fast-moving consumer goods) products, adversely affecting sector volume growth, analysts at Elara Securities India Pvt Ltd said in their December quarter result preview. Weak rural volume, lagging urban figures in the past year remain persistent. Further, low farm income and the emergence of small regional firms are hurting large listed companies, analysts said.
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The factors in Nestle’s favor are that it has prioritized expanding its distribution networks and this, according to analysts, may help it post stronger revenue growth compared to many peers.
Further, while the competitive intensity of small players in highly penetrated categories such as soaps, detergents and hair oils is likely to have an impact on the mass end of the portfolio. Premium products and food categories are expected to see urban consumption remain stable, analysts said. Thus, HPC companies are expected to post lower growth compared to companies like Nestle India, according to analysts.
Analysts at Motilal Oswal Financial Services (MOFSL) expect Nestle to report sales growth of 11% YoY to ₹4725 crores. They expect a higher contribution from consumption outside the home. The growth momentum will continue as the company reported growth of 9.5% in the previous quarter. However on a sequential basis earnings are likely to be 6-7% lower.
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The falling commodity costs are likely to benefit manufacturers like Nestle. Analysts at MOFSL expect gross margin expansion of 190bp YoY and Ebitda margin expansion of 120bp. Ebitda means earnings before interest tax depreciation and amortization.
Thus adjusted net profit according to MOFSl estimates is likely to grow 19.9% year-on-year to ₹757.8 crore during tge December quarter.
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Published: 07 Feb 2024, 10:41 IST
(tagsTo Translate)Nestle