Nestlé India Q3 preview: Sales growth, higher profitability to lift PAT by 20% YoY
The FMCG major’s gross margin and operating margin are likely to expand both YoY and sequentially, on the back of softer raw material prices, price hikes, and operating leverage benefits. Nestlé India is scheduled to release its earnings on Thursday.
Here is a summary of analysts’ expectations from the company’s Q3 earnings:
Nuvama Institutional Equities
Expect revenue/EBITDA/PAT to grow by 13%/15%/17.6% YoY.
Overall domestic volumes would grow by 7% and pricing shall remain strong given hikes in coffee, milk, and infant nutrition.
Expect gross and EBITDA margins to expand by 161 bps and 39 bps YoY, respectively. Overall, Nestlé is expected to see decent momentum during the quarter, with growth led by a mix of volume and prices.
Rural is expected to do well for Nestlé due to distribution expansion and resilience in noodles (recently introduced Rs 10 pack in Maggi).
However, coffee and milk prices remain high, which would impact margins in beverages, dairy, and confectionery products.
Motilal Oswal Securities
Expect sales growth of 12.8% YoY and gross margin expansion of 290 bps, aided by softening raw material prices. Expect higher contributions from out-of-home consumption.
Commentaries on the milk and nutrition segments are key monitorables.
Will also watch out for commentaries on demand and raw material cost trajectory.
Axis Securities
Revenue is expected to grow 12%, led by price hikes, rural-led distribution expansion, and NPD. EBITDA margin is likely to expand 235 bps YoY on account of deflation in palm oil prices, price hikes, and operating leverage benefits.
Key monitorables will be demand outlook on rural vs urban, competitive intensity, and raw material cost trend.
Kotak Institutional Equities
Nestlé
