FMCG major Nestle India Ltd on Tuesday reported a steady performance in Q1CY21 with domestic sales growing 10 percent to to Rs 3,442.03 crore in line with estimates against against Rs 3,124.23 crore of the January-March of 2020.
Total sales were marginally below expectations due to a 13 percent drop in exports. EBITDA/PAT grew 15 percent/14 percent, missing estimates by 5-7 percent on higher ad spends and lower other income, according to analysts.
The company reported a 14.62 percent rise in its net profit to Rs 602.25 crore for the quarter ended in March 2021 driven by increase in sales volume of its key products. It follows January-December financial year, and had posted a profit of Rs 525.43 crore in the same period a year ago.
Its net sales were up 8.9 per cent to Rs 3,600.20 crore during the period under review as against Rs 3,305.78 crore in the corresponding period last fiscal, the company said in a BSE filing.
According to the company, "Growth broad-based and largely driven by volume and mix" as "key products boosted by in-home consumption and posted double-digit growth".
Though demand in 'Out of Home' channel further improved in the quarter but continues to be impacted by COVID.
Nestle India's domestic sales were up 10.17 per cent to Rs 3,442.03 crore as against Rs 3,124.23 crore of the January-March of 2020. While export sales were down 12.9 per cent to Rs 158.17 crore as against Rs 181.55 crore of the corresponding quarter.
"Domestic Sales increased by 10.2 per cent driven by volume & mix and is broad based. Export Sales were lower by 12.9 per cent due to lower exports to affiliates," said Nestle India in a post earning statement.
Nestle India has witnessed 66 per cent growth in sales from the e-commerce channel, which contributed 3.8 per cent of domestic sales.
"Noteworthy has been e-commerce which continued to deliver strong performance and grew by 66 per cent to maintain its robust contribution to our domestic sales," it said.
In the January-March quarter, Nestle's total expenses were up 6.16 per cent to Rs 2,828.61 crore as against Rs 2,664.27 crore of the corresponding period.
Commenting on the results, Nestlé India Chairman and Managing Director Suresh Narayanan said, "As the pandemic rages on, the quarter gone by has been another test of resilience of my team and our partners. I feel incredibly privileged to lead a team who faced with serious challenges, persevered regardless, to deliver double digit growth over a strong comparable in 2020." Meanwhile, the company also raised its concerns over the inflationary pressures on the key raw material inputs.
"While the Nestlé India family has learnt to cope with the operating volatility in the pandemic, recent sharp escalations in key raw material prices poses challenges that we will resolutely respond to, while maintaining the integrity of our business model," it said.
Analysts take on results
Analysts at Emkay Global Financial Services said that Nestle's domestic growth has been steady and seems ahead of peers (2-year CAGR of 10 percent), driven by strong in-home consumption trends. Lockdowns are likely to impact near-term growth, but Nestle categories are likely to be resilient, offering better growth versus peers, they said.
Low input prices have supported gross margin expansion - up 220bps. The management has indicated commodity pressures ahead. However, we believe inflation in key input prices appears manageable and can be largely offset by modest price hikes.
Recent lockdowns may impact Q2 and CY21 earnings but are likely to be temporary and should not affect our CY22-23 forecasts.
According to Edelweiss, with the second wav of the pandemic hitting the country, we expect Nestle to be a big beneficiary of spike in in-home consumption, said Edelweiss. Overall, the company's high innovation, 'premiumisation' agenda and the cluster-based distribution strategy are on track, and we expect this to sustain.
Interim dividend
Meanwhile, in a separate filing, Nestle India informed its board in a meeting held on Tuesday have declared an interim dividend of Rs 25 per equity share (Face value Rs 10 per equity share) amounting to Rs 241 crore for 2021.
Shares of Nestle India Ltd on Tuesday settled at Rs 17,086.25 on BSE, down 0.02 per cent from the previous close.
(With inputs from agencies)
