Nestle India Share price rises 4% , Hits highest Q3 after earnings

Nestle India share price climbed over 4 per cent to hit its fresh record high in intraday trade on BSE on Thursday, October 19 after the company reported its September quarter (Q3CY23) scorecard. Nestle share price opened at ₹23,279.90 against the previous close of ₹23,269.65 and rose about 4.12 per cent to hit its all-time high of ₹24,228.75 on BSE. The stock finally closed 3.66 per cent higher at ₹24,122.

During market hours on Thursday, Nestle India reported a net profit of ₹908 crore in the quarter ended September 2023, registering a growth of 37.27 per cent from ₹661.46 crore in the same quarter last year. The net profit for the quarter includes a one-time gain of ₹106.4 crore.

The company’s revenue in Q3CY23 increased 9.5 per cent to ₹5,036.8 crore from ₹4,601.8 crore in the year-ago period.

EBITDA in the July-September quarter rose 21.3 per cent to ₹1,225 crore from ₹1,009.6 crore, YoY. EBITDA margin decreased by 220 basis points (bps) to 24.3 per cent from 22.1 per cent, YoY.

Besides, the board of directors of Nestle India declared a second interim dividend payout.

“The board of directors have declared a second interim dividend for 2023 of ₹140 per equity share (face value ₹10 per equity share) amounting to ₹1,349.82 crore, which will be paid on and from November 16, 2023. This is in addition to the first interim dividend of ₹27 per equity share paid on May 8, 2023,” said Nestle in an exchange filing on Thursday.

In addition, the board approved the subdivision of shares, or the split of existing equity shares with a face value of ₹10 each that are fully paid up, into ten (10) equity shares with a face value of Re 1 each that are fully paid up, subject to the consent of company members.

Experts largely positive about Nestle post-Q2 results

Amnish Aggarwal, Head of Research at Prabhudas Lilladher Pvt Ltd has an ‘accumulate’ view on the stock.

“Nestle reported a strong set of numbers in the current context (low-single-digit growth numbers expectations from the sector). We estimate low single-digit volume growth. We expect firm commodity prices in coming quarters which will check any meaningful margin expansion from high levels of 3Q23. Nestle remains a preferred pick given its strong volume growth visibility as it is under-indexed in small towns and rural India,” said Aggarwal.

Anushi Vakharia, a research analyst at StoxBox pointed out that a double-digit growth in milk products and nutrition brands aided Nestle India’s revenue growth in the September quarter. Besides, KitKat uplifted the confectionery business performance while consistent market share gains in Nescafe added to the overall robust performance.

Additionally, a higher focus on a more premium mix (mega launch plans for KitKat’s premium portfolio) and falling commodity prices in multiple categories aided in a higher-than-anticipated margin expansion.

“While a good flush season ahead is expected to keep the milk prices stable, we would keenly track the management’s commentary on the effect of volatile coffee prices and the impact of uneven rainfall on the business performance for the upcoming quarters. Looking ahead, we continue to remain optimistic about the volume-driven growth plans of the business as it penetrates deeper into the rural areas through its RURBAN strategy and implemented through initiatives like the customer ordering app – NESmitra,” said Vakharia.

Source : The Mint Oct 19th 2023