Analysts on an average had expected profit of Rs 4.06 billion for the quarter from the fast moving consumer goods (FMCG) company.
Domestic sales grew 13.4% at Rs 25.60 billion on a comparable basis, adjusted for Goods and Services Tax (GST). Exports were up 6% at Rs 1.78 billion.
“During the quarter the company has sustained growth momentum, which is backed by broad volume based growth across categories. This is in line with the company’s strategy of broad based growth through increased penetration,” said Suresh Narayanan, Chairman and Managing Director, Nestle India.
EBIDTA (Earnings before interest, tax, depreciation and amortization) margin improved 25.5% in Q1CY18 from 22.5% in Q4CY17 and 20.9% in Q1CY17.
“The beat was driven by mainly higher-than expected gross margin expansion aided by lower commodity prices, especially in milk and milk solids. Lower-than-expected other expenses and employee costs also facilitated the beat to an extent,” analysts at IIFL Institutional Equities said in earnings upgrade with ‘buy’ rating on the stock and 12 month target price of Rs 10,000.
Nestlé is one of the most urban-centric FMCG companies and is enjoying the benefits of an up-move in urban demand, as is evident from good sales growth in categories such as QSR chains.
At 11:17 am; the stock was trading 6% higher at Rs 9,540 on the BSE, as compared to 0.34% rise in the S&P BSE Sensex. A combined 150,275 shares changed hands on the counter on the NSE and BSE so far.
In past three months, Nestle India outperformed the market by surging 37% against 4% rise in the benchmark index.
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