Nestle India March Quarter Review- Cerelac Issue, Rising Raw Material Near Term Headwinds: Prabhudas Lilladher

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Prabhudas Lilladher Report

Nestle India Ltd. displayed another quarter of strong topline led by growth across segments despite tough economic environment. Nestle India continues to report broad based growth across segments, markets (Metros, tier-I-6 cities and rural markets) and channels (modern trade, out-of-home and e-commerce). Long term drivers remain intact, led by-

1. sustained expansion in rural reach (~20-25% of sales),

2. healthy innovation pipeline

3. huge scope of growth in coffee, ready-to-drink and chocolates and

4. higher growth in channels like E-Com and MT and

5. strong traction in pet care segment.

We believe Nestle India volume growth might suffer in the near term due to-

1. negative publicity and ensuing probe (FSSAI) around cerelac and KitKat (higher sugar content) and

2. expected increase in chocolate prices (KitKat, Munch) on account of more than 175% jump in cocoa prices since December 2023.

Nestle India has sustained investments in expanding product portfolio with expected launch of Nespresso by end of CY24 and joint venture with Dr. Reddy's Labs has to bring science-backed nutritional solutions to more consumers.

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