Q1CY23 Preview: Nestle India: Revenue seen at Rs 44,448 million, PAT at Rs 6,974 million

Result date: 25^th April, 2023

Recommendation: Add

Target price: Rs 22,000

Nestle India follows a January to December financial year. Company is likely to report double digit growth in revenue and Profit After Tax (PAT), with the latter growing at a faster pace than the former. This growth will be driven almost entirely by price hikes as volumes are likely to decline during the quarter.

The maker of Maggi, Nescafe and Kitkat could witness moderate sales growth in its largest segment – milk and milk products. Continued market share loss in Maggi Chotu packs remains a prominent drag on the company’s sales volumes. Strength in the confectionary segment though could partially offset this weakness.

While edible oils prices witnessed deflation in the quarter, high inflation in wheat and dairy products; coupled with higher ad spends will exert some pressure on the margins. 

The company’s Profit After Tax (PAT) could grow 17.3% over the year-ago quarter.

Important management insights to watch out for:

• Demand outlook on rural versus urban markets 
• Competitive intensity across product segments
• Outlook on the milk and nutrition segment
• Input cost trends and margin outlook

Source: IIFL Research