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Systematix Research Report
Nestle India Ltd. reported a mixed set of result, with solid broad-based revenue growth, offset by sharp dip in margins. Revenue growth at 16% comprised 6.4% volume growth (on a base of 12%) and pricing/mix growth of 10% (indicating strong brand equity).
Ebitda and profit after tax were down 1.5%/4.3%, given the sharp inflation in key inputs, which was not fully passed on to protect volume growth.
Nestle also took a couple of strides in its premiumisation agenda by acquiring the high-potential India pet food business, Purina, from its global parent, and also introduced the super-premium kids cereal brand, Gerber.
We see resilient volume performance in the prevailing environment and strong growth in rurban/rural markets as key positives. However, margins could remain under pressure near-term, given persistent high prices of many commodities and limited headroom to take up further pricing actions.
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