Nestle India Q4 Results Review - Inline; Volumes Under Pressure: Motilal Oswal

Motilal Oswal Report

Nestle India Ltd. declared an inline set of results; however, the tonnage dip in Q4 CY22 (as shared in the company presentation) compared to preceding quarters indicate that the high inflation is likely to curb volume growth in the near-term.

The company is planning a capex of Rs 50 billion over the next three years, which is expected to boost volume growth, especially in prepared dishes (Maggi) and chocolates and confectionary over the medium term.

Nestle India reported net sales growth of 13.8% YoY to Rs 42.6 billion (in-line), led by improved volume and mix. Domestic sales grew 14.1% YoY. Export sales grew 17.1% YoY to Rs 1.7 billion. OOI decreased 29%YoY to Rs 235 million.

Ebitda grew 14.8% YoY to Rs 9.8 billion (in-line). Profit before tax grew 18.3% YoY to Rs 8.6 billion (our estimate: Rs 8.2 billion). Adjusted profit after tax grew 10.2% YoY to Rs 6.3 billion (in-line).

Gross margin declined ~210 bps YoY to 54.9% (estimate: 55.1%). The board has recommended a final dividend of Rs 75.

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