Nestle Q2 Preview: PAT may rise 36% YoY on strong sales, margin show

economictimes.indiatimes.com:

Nestle India is likely to report double-digit rise in both sales and profit for the quarter ended June, aided by healthy volume growth and profitability. The net profit for the quarter is seen rising nearly 36% year-on-year (YoY) to Rs 698 crore, according to the average of estimates given by 10 brokerages. Revenue from operations is likely to grow 16% on year to Rs 4,690 crore.

The “Maggi” noodles maker is slated to release its second quarter numbers on Thursday. Nestle India follows the calendar year. In terms of key monitorables, analysts will keep an eye on margin trajectory from the management given that milk prices remain high.

Outlook for the milk and nutrition business and raw material price trend will also be key focus areas for investors and analysts. Here’s summarising analyst expectations on the earnings front from the FMCG major:Nuvama Institutional EquitiesExpect Revenue/EBITDA/PAT to grow by 16.2%/21.5%/33.5% YoY, respectively. Overall domestic volumes are likely to grow by 5% (on a base of 7.9% YoY in Q2CY22) and pricing will remain strong given hikes in milk and infant nutrition.

Overall, Nestle is expected to see good momentum during the quarter. Rural is expected to do well for Nestle due to distribution expansion and resilience in noodles. However, milk prices remain high, which will impact margins in dairy and confectionery products.PhillipCapitalHigh teen revenue growth to continue owing to distribution expansion initiatives, price hikes in infant milk and prepared dishes segment.