Nestle India Q1 Results CY2023 Preview: What to Expect?

On 25th April, FMCG major Nestle India is going to announce its financial results for the March 2023 quarter. Analysts predict that price increases will be the main driver of revenue growth, with underlying volume growth likely to be modest at 3%. Due to the inflation of major input prices, margins are also likely to be under pressure when compared to the same period last year. The company uses a January-to-December fiscal year.

Nestle India reported a fourth-quarter net profit up 66% year over year to Rs 628 crore, while sales increased 14% to Rs 4,233 crore.

For the fourth quarter that ended in December 2022, the company reported an EBITDA of Rs 973 crore, an increase of 14%, with margins of 22.9%.

Market Expectations from Nestle’s Quarterly Results:

According to Prabhudas Lilladher, revenues will increase by 14.5%. Gross margins are expected to decrease by 89 basis points (bps) YoY. The EBITDA margins are anticipated to decline by 58bps YoY to 22.8%. The sales amount will probably fall between Rs. 4,557 crore and Rs. 4,491 crore. 

Pricing will drive a 12% YoY increase in revenue, according to Jefferies. The gross margins, though slightly lower quarter-over-quarter, will probably increase by 4 ppt YoY. Expect an EBITDA margin of 17%, down from the quarter ending in December's 19.5%.

Kotak Institutional Equities models an increase in Net domestic revenues  by 13% year over year, entirely driven by price increases. Due to the continued share loss in Maggi LUP and the weak trends in the milk/nutrition portfolio, volume (tonnage) is likely to slightly decline.

The commentary on the milk and nutrition segment, as well as the same on demand and material costs, are some of the most important things to keep an eye on.

The company's sales volumes continue to be significantly impacted by the ongoing loss of market share in Maggi Chotu packs. However, growth in the confectionery industry could partially offset this decline.

While there was deflation in the price of edible oils during the quarter, there will be some pressure on margins due to high inflation in the price of dairy and wheat products as well as higher advertising spending. 

Profit After Tax (PAT) for the business may increase 17.3% from the prior quarter.