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  • 25 Apr 2025
  • ICICIdirect Research

NESTLE INDIA REGISTERED YET ANOTHER QUARTER OF MUTED PERFORMANCE

NESTLEIND - 2408 Change: -1.00 (-0.04 %)

News: Nestle India (Nestle)’s revenues grew by 4.5% yoy to Rs5,447.6crore slight miss on our as well as street expectation of Rs5583 and Rs5527crore in Q4FY25. Domestic business grew by 4.2%yoy with volume growth of 2% while exports business decreased by 9% during the quarter. Higher coffee and cocoa prices continue to put stress on margins with gross margins down by 63bps yoy to 56.2%. OPM decreased by 37bps yoy to 25.2% better than our expectation of 23% and street expectation of 24% during the quarter. The operating profit grew by 3.0%yoy to Rs1,389crore. Lower other income, higher interest cost and higher depreciation led to 4% decline in the adjusted PAT to Rs885.4crore, in-line with our expectation of Rs883crore and street expectation of Rs880crore.

View: Nestle India registered yet another quarter of muted performance with domestic business growing by less than 5% with low single digit volume growth. Higher coffee prices and cocoa prices continue to put stress on the margins. Outlook on coffee prices continues to remain inflated with lower production estimates in key growing region of Brazil and Vietnam. This will continue to put stress on the profitability. On the other hand, recovery in the domestic business volume growth will depend on recovery in the urban demand in the coming quarters.

Impact: Neutral