Nestle India Limited Q3 CY21 Result Analysis4 min read
Q3 CY21 Result:
Do Note that Nestle India follows Calendar Year i.e., 1st January to 31st December.
- The total revenue of the company grew by 9.6% YoY in Q3CY21 from Rs. 3,542 Cr. in Q3CY20 to Rs. 3,883 Cr. in Q3CY21. Sequentially the total revenue of the company has increased by 11.7% from Rs. 3,477 Cr. in Q2CY21.
- The Domestic Sales of the company have increased by 10.1% YoY and 11.6% QoQ to Rs. 3,687 Cr. in the quarter ended 30th September 2021.
- Revenue growth was mainly supported by broad-based domestic sales growth which was largely driven by volume and mix.
- The Earnings before Interest, Tax, Depreciation & Amortisation (EBITDA) of the company reached Rs. 948 Cr. in the September Quarter growing by 7.3% YoY from Rs. 884 Cr. in the same period of the previous financial year. Quarter-on-Quarter, the EBITDA of the company has increased by 11.8% from Rs. 848 Cr. in Q2CY21.
- The EBITDA margin stood at 24.4% falling by 50 bps YoY and remaining flat QoQ.
- The Profit Before Tax (PBT) of the company has increased by 6.1% YoY from Rs. 786.5 Cr. in the quarter ended 30th September 2020 to Rs. 834 Cr. in the quarter ended 30th September 2021. Sequentially, the PBT of the company has expanded by 14.2% from Rs. 730.5 Cr. in the quarter ended 30th June 2021.
- The Company has registered a Net Profit of Rs. 617 for the 3rd quarter of its Calendar Year going up by 5.2% YoY from Rs. 587 Cr. from the same quarter of the previous calendar year. Sequentially Net Profit is up by 14.6%, it was Rs. 538.6 Cr. in June Quarter of Calendar Year 2021.
- The Net Profit Margin of the company stood at 15.9% in the September Quarter of 2021 down by 60 bps YoY.
9M CY21 Performance:
- In terms of Nine-Month performance, the company has generated total revenue of Rs. 10,970 Cr. in the 9M CY21 against Rs. 9,917 Cr. in the 9M CY20 up by 10.6% over the period.
- In the revenue growth of these 9 months, the Domestic Sales has grown by 11.2% while Export has increased by just 0.5%.
- EBITDA for the 9 months in Calendar Year 2021 is Rs. 2,726 Cr. up by 12.4% in the same period of the previous calendar year at Rs. 2,424 Cr.
- The EBITDA margin stood at 24.8% for 9M CY21 up by 40 bps against 9M CY20.
- The Net Profit for the 9M period of CY21 is Rs. 1,758 Cr. up by 9.9% against Rs. 1,599 Cr. in 9M CY20.
Revenue Growth Trend:
- The Company registered revenue of Rs. 3,833 Cr. in Q3 CY21 where Domestic Sales contributed Rs. 3,687 Cr. and Export Sales Contributed 178 Cr.
- Here, the domestic sales growth is at 10.1% which is mainly due to broad-based and largely driven by volume & mix.
- The Q3 CY21 revenue of the company is at an all-time high level since Q1CY19.
EBITDA/EBITDA Margin Trend:
EBITDA for the company for the quarter ended 30th September 2021 stood at Rs. 948 Cr. and EBITDA Margins at 24.4% hovering around the earlier levels.
The Board of Directors has declared a second interim dividend for 2021 of INR 110.00 per equity share amounting to INR 10,605.7 million, which will be paid on and from 16 November 2021. This is in addition to the first interim dividend of INR 25.00 per equity share paid on 19 May 2021.
Q3 CY21 Category Performance:
- In overall terms, the third quarter saw strong high single-digit volume & mix growth in domestic sales, which reinforces the secular trends.
- Prepared Dishes and Cooking Aids: Continuing momentum and improved availability helped achieve good growth despite the high base effect (build‐up after Q2’20). MAGGI Noodles and MAGGI Masala‐ae‐Magic posted healthy growth while MAGGI Sauces had somewhat muted growth due to decreased in‐home consumption, high base, and increased competitive intensity.
- Milk Products and Nutrition: Toddler range (CEREGROW, NANGROW) and MILKMAID posted strong double-digit growth.
- Confectionery: All power brands KITKAT, MUNCH, and MILKY BAR registered high double-digit growth aided by media campaigns, attractive consumer promotions, and distribution drives.
- Beverages: Strong double-digit growth in NESCAFÉ Classic led by increased penetration, visibility actions, and sustained generating demand inputs.
Q3 CY21 Business Highlights:
- The E-commerce channel is expected to continue its growth journey and Nestlé India is gaining increasing traction herein. More players have increased their footprint in the E‐commerce space along with infrastructure development by existing E‐commerce customers.
- Out-of-Home (OOH) channel is on a recovery path with the gradual opening of hotels, restaurants, offices, and malls. There are signs of a return to pre‐pandemic levels of business traction in some geographies, categories, and channels.
- MAGGI Noodles and POLO have been introduced in the markets of the Middle East recently. Crunch Wafers have been introduced in ASEAN markets.
The price outlook for key categories like wheat, coffee, edible oils remains firm to bullish while costs of packaging materials continue to increase amid supply constraints, rising fuel, and transportation costs. Input prices are expected to be on a bullish trend both globally and to some extent locally. The recent announcement of scrapping import duties on edible oils, if continued next year, beyond March 2022, can have a positive impact on muting food inflation pressures.
What Should Investors Do?
Nestle India is one of the leading FMCG Companies and hence has always been a great pick for Conservative to Moderate Investors. The Company has performed very well and up to the market expectations in the Q2FY22. But do not take this discussion as direct investment advice. Do follow due diligence before making any investment decisions and avoid lumpsum investment in this market situation and follow a staggered approach of investing.