Nestle India stock drops 3% after Q1 earnings miss street estimates

Nestle India Q1 results impact: Shares of Nestle India slipped as much as 2.96 per cent to hit an intraday low of Rs 2,468.50 per share on July 25, 2024.

The fall in the share price came after the company announced its June quarter (Q1FY25) results, which missed street expectations. 

The FMCG major’s profit rose 6.92 per cent on a year-on-year (Y-o-Y) basis to Rs 746.6 crore in June quarter of financial year 2025 (Q1FY25), as opposed to Rs 698.3 crore in the same quarter a year ago (Q1FY24).

The revenue from operations, or topline, grew 3.3 per cent to Rs 4,813.9 crore in the June quarter of FY25, as against Rs 4,658.5 crore in the June quarter of FY24. 

 

At the operating front, Nestle India’s earnings before interest, taxes, depreciation and amortisation (Ebitda) surged 5.6 per cent annually to Rs 1,114.20 crore in Q1FY25, from Rs 1,055.40 crore in Q1FY24. 

Consequently, Ebitda margin jumped 50 basis points (bps) to 23.2 per cent in the June quarter of financial year 2025, from 22.7 power cent in the June quarter of financial year 2024. 

During the quarter, Nestle India reported a total sales growth of 3.8 per cent. Domestic sales growth, meanwhile, stood at 4.2 per cent.

Suresh Narayanan, chairman and managing director, Nestle India said, “I am pleased to share that despite external challenges such as lower consumption growth, concerns on continued food inflation and volatile commodity prices, we have delivered growth across our product groups. Almost a fourth of our growth has been mix and volume led, and we hope to strengthen this trend in the coming months.”

Narayanan further said, “I am happy to inform you that 5 of our top 12 brands grew double-digit. Our Beverages business stood out, with strong double-digit growth, despite a scorching summer across many parts of India.”

Nestle India FY25 Outlook

That apart, Nestle India has revised its forecast for full-year organic sales growth downward to a minimum of 3 per cent, down from approximately 4 per cent previously projected, according to Reuters. The adjustment comes as the company observed a faster-than-expected decline in prices, prompting the revision in its outlook.

Despite concerns that price increases could deter consumers, Nestle, known for products such as KitKat bars, Nespresso coffee, and Maggi seasoning, managed to increase its sales volumes.

Commodity Check

Commodity prices are seeing unprecedented headwinds in coffee and cocoa with all time high prices and an ongoing price rally, Nestle India said. 

Cereals and grains are going through a structural cost increase backed by MSP. There is relative stability in milk prices, packaging and edible oils, it added.

At 12:00 PM, shares of Nestle India were trading 2.94 per cent lower at Rs 2,469.05 per share. In comparison, BSE Sensex was trading 0.35 per cent at 79,872.08 levels.