Nestle India's Q3 Results: Net Profit Surges 37.27%, EBITDA Margins Slip

Nestle India's finances are on the upswing, with a net profit of Rs 908 crore in the September 2023 quarter, showing a solid 37.27 per cent growth compared to Rs 661.46 crore from the same period last year.

In the third quarter of FY23, Nestle India experienced a 9.5 per cent rise in its revenue, reaching Rs 5,036.8 crore, compared to Rs 4,601.8 crore in the corresponding period of the previous year. Unlike other domestic corporations, Nestle India follows January to December financial year.

Followed by the positive figures, the shares of Nestle India surged nearly 261 points, trading at Rs 23,524 price level, nearing its 52-week high.

Commenting on the results, Suresh Narayanan, Chairman and Managing Director, Nestlé India said, “Domestic sales grew double-digit, on account of mix, volume and price. We crossed Rs 5,000 crore turnover, which has been our first in any quarter in the history of the company and a landmark for us."

At the operational level, the earnings before interest, tax, depreciation, and amortization (EBITDA) for the July-September quarter surged by 21.3 per cent year-on-year, reaching Rs 1,225 crore, while the EBITDA margin experienced a 220-basis point drop, decreasing to 24.3 per cent from 22.1 per cent in the same period.

“Uneven rain and rain deficit is expected to impact production of maize, sugar, oilseeds and spices that may have an adverse impact on pricing. Coffee continues to be volatile because of the global supply deficit. The weather during the harvest of the Indian Robusta crop may impact production. Upcoming winter weather may impact wheat production. Healthy milk flush is expected in winter which is expected to keep prices stable," Nestle India stated.

The company has reported a strong set of numbers in the current context (low-single-digit growth numbers expectations from the sector). We estimate low single-digit volume growth and firm commodity prices in coming quarters which will check any meaningful margin expansion from high levels of Q3CY23. We have an ACCUMULATE rating on the stock, said Prabhudas Lilladher.

“The FMCG giant remains a preferred pick given strong volume growth visibility as it is under-indexed in small towns and rural India.” The brokerage firm added.

The company, in addition to presenting its quarterly earnings, has announced a second interim dividend of Rs 140 for each equity share having a nominal value of Rs 10 in the fiscal year 2023. This dividend is scheduled for distribution on or after November 16, 2023.