Nestle India Q4 Results Review - Margin Surprise: Axis Securities

Axis Securities Report

Nestle India Ltd. delivered resilient all-round performance, led by strong double-digit growth across all categories, primarily led by price growth.

Domestic revenue grew 14% YoY (tonnage volume declined 1% on account of price increase in price sensitive low unit packs), exports grew ~18% YoY led by continued expansion in the new markets and channels.

Furthermore, the management reiterated its Rurban strategy is fueling the overall rural growth, despite rural continuing to witness a slowdown.

Gross margins declined 204 basis points YoY to 54.6% owing to raw material inflation. However, on a positive front, it was down QoQ 208 bps as raw material prices declined sequentially.

Nestle India's Ebitda margins at 23% stood flat despite gross margin pressure owing to the company’s tight control on employee cost and lower ad spends. The company’s adjusted profit after tax grew ~13% YoY.

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More Research Reports On Nestle India's Q4 CY22 Results Review

• Weak Volume; Cost Control Supports Margin: HDFC Securities

• Inline; Volumes Under Pressure: Motilal Oswal

• Recovery Expected In Ensuing Quarters: Dolat Capital

• Price Hike In Low Unit Packs Impacts Volumes: ICICI Direct

• Volume Weakness Offset By Unexpected Margin Improvement: Systematix

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