Nestle India cracks 3% as Q2 volume growth came below Street estimates

Shares of Nestle India cracked 3 per cent in Thursday's intra-day trade after the company's volume growth in the June quarter (Q2CY23) was 4-5 per cent year-on-year (YoY), lower than the Street estimates of 7-8 per cent.
 

So far this calendar year, Nestle India has gained over 16 per cent, as against a 9 per cent surge in the S&P BSE Sensex.
 

In the recently concluded quarter, the FMCG major's revenues grew by 15.1 per cent YoY to Rs 4,660 crore, driven by domestic or export sales of 14.6 per cent or 25.4 per cent YoY. Higher net realisations, too, helped gross margins expand 93 basis points (bps) YoY to 54.8 per cent.
 

 

Moreover, adjusted profit-after-tax (PAT) grew 30 per cent YoY to Rs 700 crore in Q2CY4.
 

Product-wise, prepared dishes and cooking aids, milk products, confectionery, and beverages registered double-digit growth. The management said that this would be the fifth quarter in a row of double-digit growth across all product groups.
 

"Domestic sales growth is broad-based and driven by a healthy balance of pricing, volume, and mix. Strong growth across Mega cities and Metros, robust performance in Tier 1 to 6 towns and continued strength was seen in rural markets," the company added.
 

That apart, the company approved to change the financial year of the company to April-March from January-December.
 

Analysts at Prabhudas Lilladher, meanwhile, shared an accumulate rating on the counter, with a target price of Rs 22,600 per share.
 

"Nestle reported strong double digit growth across all product categories supported by broad-based growth across urban and rural markets. Overall commodity basket appears to be softening, which should help build back margins in subsequent quarters," the brokerage firm added in a post-result review note.