Nestlé Q1 preview: PAT could rise up to 14% year-on-year, analysts say

Overview of Nestlé Q1: An increase in home consumption, better demand from rural and urban India, sustainable growth of Maggi noodles and new product launches are some of the factors that analysts say will drive the growth of the goods maker fast-moving consumer market Nestlé India in the January – March 2021 quarter.

Nestlé, which is expected to release results for the March quarter on April 20, could post a 14% year-over-year (year-over-year) increase in first-quarter net profit, while revenue could rise 5-11%. The company follows the financial year from January to December.

Analysts also expect gross margins to improve, thanks to benign input prices. The EBITDA margin (earnings before interest, taxes, depreciation and amortization) is however likely to come under some pressure due to the increase in personnel costs and other expenses.

The company’s shares have fallen more than 6 percent since the start of the year. In the three months ended March 2021, they lost more than 6.5% against a 4% increase in the BSE Sensex index and 2% in the BSE FMCG index.

Here’s what the top brokers expect from their Q1FY21 numbers:

ICICI titles

The brokerage is forecasting an 11.8% yoy jump in net income for the March quarter to Rs 587.4 crore from Rs 525.43 crore posted in the same period last year. On a quarterly basis (QoQ), the figure is expected to increase to 21.5 percent. The company had posted a net profit of Rs 483.3 crore in the previous quarter.

Meanwhile, he expects Nestlé to post a 10.8% year-on-year increase in first quarter revenue to Rs 3,683.3 crore thanks to sustained growth in Maggi noodles. In addition, the launch of new products and the expansion of distribution in rural areas will also contribute to growth, he said.

The firm posted a net profit of Rs 3,325.27 crore in the corresponding quarter of last year and Rs 3,432.6 crore in the December quarter of CY20. Sequentially, the figure is expected to increase by 7.30 percent.

“We expect the company to maintain operating margins at 23.7% (11 basis points lower). The increase in milk prices was offset by cost reduction measures and rationalization of media spending. The business was able to grow at a slower pace at 7.9 percent at CY20 despite strong growth momentum in packaged food mainly due to supply constraints in the noodle segment, ”added the broker.

Narnolia Financial

Narnolia analysts have more subdued expectations of a mere 1 percent increase in profit for the March quarter to Rs 528 crore. While on a QoQ basis, the figure is expected to increase by 9 percent.

They expect income for the quarter under review to increase 5% year-on-year to Rs 3,490 crore, due to increased home consumption, better demand from rural and urban India. , traction of different channels and penetration of volume growth with secular growth in all categories. Sequentially, they expect that number to increase by almost 2 percent.

“The company’s home consumption portfolio in food and beverage categories such as Everyday Dairy Whitener, Nestle a + Milk, another milk-based portfolio, Nescafe, Ketchup & Sauces and Maggie are expected to continue their positive trajectory. “, did he declare.

Gross margin is expected to improve 240 basis points to 58.7% yoy while EBITDA margin is expected to decline 68 basis points yoy to 23.4% yoy. EBITDA margins were 24.1% and 22.1% respectively in Q1CY20 and Q4CY20.

According to analysts at Narnolia, the growth in volume and performance of the companies’ product portfolio, as well as the movement of advertising and other expenses are among the most controllable.

Financial Edelweiss

The brokerage is forecasting profit for the March quarter at Rs 6.00.6 crore, up 14.3% year-on-year and 24.3% QoQ. He also expects income for the period to grow by 7.9 percent per year to Rs 3,588.8 crore, while sequentially the figure could rise 4.6 percent.

“Nestlé will likely experience about 9 percent year-on-year growth in domestic revenues on a 10.7 percent basis. The T4CY20 grew 10.1 percent year-on-year on a 10 percent basis. Export revenue growth is expected to decline 10 percent. YoY cent on a 12.9 percent basis, “Edelweiss Financial said.

Commodity prices have started to increase slightly, however, cost optimization measures are expected to help expand the EBITDA margin by 120 basis points year-on-year, he added. The brokerage sets the EBITDA margin figure for the March quarter at 25.3%.

Prabhudas Lilladher

The brokerage expects Nestle to post adjusted earnings for the first quarter of CY21 at Rs 583.5 crore, up 9.5% year-on-year, from Rs 532.7 crore posted in Q1CY20. Adjusted profit could rise by 21.5 percent QoQ from Rs 480 crore posted in the previous quarter.

“We expect Nestlé to deliver 10.5 percent revenue growth thanks to strong traction in Maggi, Chocolates, the resumption of service quality in out-of-home consumption and an increased focus on rural growth, ”the broker said. It fixes the first quarter income at Rs 3,674.4 crore.

He plans to reduce the EBITDA margin to 23.8%, due to rising personnel costs and other expenses.


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