Share Market Live

NSE

Nestle India, the India unit of the world's largest FMCG company Nestle S.A. will report its September quarter results on Wednesday, October 19.

The company, which reports earnings in a calendar year format, is likely to report revenue growth in the low double-digits compared to the September quarter last year, according to a CNBC-TV18 poll. The growth in the topline is likely to be aided by price hikes of nearly 5 percent taken during the quarter.

While operating and net profit is likely to grow in mid-single digits, margins may decline, in line with the drop in gross margins.

Nestle's gross margins are likely to remain flat compared to the June quarter. However, they are likely to decline 150-160 basis points compared to the same period last year. Operating margins are also likely to decline in-line with the gross margins.

The company's out-of-home (OOH) channel is likely to report growth over pre-pandemic levels. The segment posted a strong performance in the June quarter driven by better channel opening and business-led initiatives. The out-of-home business caters to other categories like restaurants, fast-food establishments, cafes, schools, and vending machines.

Among the key things to watch during the earnings would be the management's commentary on demand and inflation. FMCG companies like Marico, Godrej Consumer, and Dabur have already highlighted weak rural sentiment, resulting in downtrading in many categories in their quarterly business updates.

Also Read: Maggi-maker Nestle turns positive on India market but CLSA expects downside in shares

Nestle's commentary on the rural markets will be watched as the company announced plans to reach around 1.2 lakh villages, each of which had a population of over 5,000, over the next 2-3 years.

Last month, Nestle CEO Mark Schneider told Storyboard18 that the company's parent Nestle SA intends to invest Rs 5,000 crore in India by 2025 to boost capacity and for Research & Development.

The fresh investments will help the company accelerate its core business in the country and leverage new opportunities for growth in well-established and emerging categories.

Also Read: Nestle to invest Rs 5000 crore by 2025 in capacity and brand building in India: CEO Mark Schneider

At present, 99 percent of what Nestle sells in India is made in India. Nestle owns over 2,000 brands globally and is the maker of iconic household brands such as Nescafe, Milkybar, Milo, Kit Kat, Bar-One, Milkmaid, and Nestea.

Another factor to watch during the earnings would be the growth and integration of the pet care business of Purina. The company acquired the pet foods business of Purina Petcare India for Rs 123.5 crore in July.

Shares of Nestle India are down 3.5 percent so far this year, underperforming most of its peers and the Nifty FMCG index, which is up 15 percent year-to-date.

(Edited by : Abhishek Jha)