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Result Analysis: Nestle India Ltd. (CMP: Rs.19,009)  Result Update: Q4FY22

Nestle India is one of the biggest players in FMCG segment is primarily involved in Food business which incorporates product groups viz. Milk Products and Nutrition, Prepared Dishes and Cooking Aids, Powdered and Liquid Beverages and Confectionery. The company manufactures products under brand names such as Nescafe, Maggie, Milkybar, Kit-Kat, Bar-One and Nestea. It has presence across India with 9 manufacturing facilities and four branches spread across the region.


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    Stock Details
    Market Cap. (Cr.) 183276
    Equity (Cr.) 96.42
    Face Value 10
    52 Wk. high/low 21053 / 16000
    BSE Code 500790
    NSE Code NESTLEIND
    Book Value (Rs) 255.06
    Sector FMCG
    Key Ratios
    Debt-equity: 0.1
    ROCE (%): 55.52
    ROE (%): 104.53
    TTM EPS: 243.25
    P/BV: 74.5
    TTM P/E: 80.66

    Result Highlights:

    • Nestle India has delivered strong results in Q4FY22 by laying a 22.8% YoY increase in the revenue from operations to Rs.4,257 cr. and huge increase of 74% in the Net profits to Rs.628 cr.

    • Company’s domestic sales rose by 22.5% YoY in the quarter led by volume and mix growth. Export Sales rose by 40.3% YoY in the December quarter.

    • Total cost of the materials rose by 17.4% YoY due to the increase in inflation. Finance cost and Net provisions reduced significantly in the quarter by ~15% and 142% respectively compared to the previous year same quarter.

    • EBITDA of the Nestle grew by 18% YoY while EBITDA margin decreased marginally by 10 bps YoY to 24% in the quarter.

    • In 2022, Nestle India has acquired PURINA Petcare business that delivers nutrition to pets and also launched globally renowned GERBER cereals catering to the nutrition needs of toddlers.

    • The management of the company declared final dividend of Rs.75 per equity share in the quarter and For the FY22 it has given dividend of Rs.220 per equity share.

    Financial Performance:

    Shareholding Pattern:

    Particulars %
    Promoters & Promoter Group 62.77
    FIIs 13.03
    DIIs 9.06
    Public 13.41
    Others 1.73

    Managerial commentary:

    Commenting on the results, Mr. Suresh Narayanan, Chairman and Managing Director, Nestlé India said, I am delighted to share that we delivered our highest double‐digit growth in a decade led by sustained volume and mix led growth, leading to a strong value growth. In 2022 total sales grew by 14.5% and domestic sales increased by 14.8%, with broad based performance across all categories. Our robust performance on e‐commerce continued, fuelled by Quick Commerce and Click & Mortar. Out‐Of‐Home (OOH) business made a strong comeback in 2022, recovering its pre‐covid base and delivering robust growth by revamping, resetting geography, channel and sales priority. We launched our first ever ‘direct to consumer’ (D2C) platform – www.mynestle.in where products manufactured by the Company in India are available in Delhi– NCR.

    Outlook:

    Nestle India reported resilient all-round performance in Q4FY22 with led by strong double-digit growth across all categories, primarily led by price growth.Domestic as well as exports sales grew by healthy percentage compared to last year. The management stated, its Rurban strategy is fueling the overall growth despite rural market is showing a slowdown. Present inflation would take some time to settle down and would help the company in expanding the margins in the coming period. Nestle has delivered the earnings of Rs.247.9 in the FY22 and the PE of the company stands at 77x on the current price.

    Results: 

    Particulars (In Rs. Cr.) Q4FY22 Q3FY22 Q4FY21 QoQ% YoY% FY22 FY21
    Domestic Sales 4,062 4,372 3,568 -7.1% 22.5% 16,098 14,025
    Export Sales 171 205 146 -16.6% 40.3% 692 640
    Other Operating Revenue 24 24 33 -3.6% -26.3% 107 76
    Revenue From Operations 4,257 4,602 3,748 -7.5% 22.8% 16,897 14,741
    Other Income 30 31 27 -3.6% 12.0% 101 120
    Total Income 4,286 4,632 3,775 -7.5% 22.7% 16,998 14,861
    Cost of materials consumed 2,006 1,953 1,663 2.7% 17.4% 7,652 6,154
    Purchase of stock-in trade 95 80 68 19.0% 17.4% 348 262
    Changes in inventories -180 145 -116 -223.6% -224.8% -250 -68
    Employee expense 407 420 389 -3.1% 8.0% 1,635 1,530
    Other Expense 934 978 876 -4.6% 11.7% 3,697 3,266
    Impairment Loss on Property, Plant & Equipment 13 29 1
    EBITDA 981 1,026 868 -4.3% 18.1% 3,785 3,595
    EBITDA Margin (%) 24.2% 23.5% 24.3% 70 bps -10 bps 23.5% 25.6%
    Finance Cost 45 37 44 20.5% -14.7% 155 202
    Depreciation & Amortisation expense 99 98 106 0.5% -7.4% 403 391
    Net Provisions for Contingencies -9.53 6 -14 -259.6% -142.0% 16 -25
    Corporate Social Responsibility Expense 18 16 24 13.5% -34.7% 56 53
    Exceptional Items 237 237
    Profit Before Tax 859 899 500 -4.5% 79.9% 3,256 2,857
    Tax 231 238 121 -2.9% 97.4% 865 739
    Profit After Tax 628 661 379 -5.0% 74.3% 2391 2118
    PAT Margin (%) 14.8% 14.4% 10.1% 40 bps 470 bps 14.1% 14.4%
    EPS (in Rs.) 65.14 68.61 39.36 -5.1% 74.3% 247.94 219.72
    Source: Company website, EWL Research

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