High cost inflation, weak domestic revenue may hurt Nestle's topline growth

Domestic sales grew by 10 per cent in Q4, but gross margin contracted by 217 basis point to a 10-quarter low of 56.5 per cent

Nestle India (Nestle) continued to outperform its peers such as Britannia in December 2019 quarter (Q4), but it also witnessed relatively higher inflationary pressure. And, the latter could prove to be a party-spoiler for the company. Nestle follows January-December accounting period and announced its Q4 numbers on Thursday post market hours.

While the packaged food and beverage major’s net sales grew by 8.8 per cent year-on-year to Rs 3,131 crore, profit before tax (PBT) surged 17.7 per cent year-on-year to Rs 615 crore in Q4. Both these parameters, however, were a tad below Bloomberg consensus of Rs 3,143 crore