About the Company

Nestle India is a subsidiary of NESTLÉ S.A. of Switzerland. The products offered by Nestlè in India range across categories such as milk and nutrition, chocolates and confectionary, beverages and prepared dishes and cooking aids.

Some of the famous brands of the company are Nescafe, Nestlè Everyday, Sunrise, Maggi, Kitkat, Milkybar, Milkmaid, Nestea, Munch, Bar one, Polo and many more. Nestle is the market leader in various categories such as Infant Cereals (96.5%), Instant Pasta (65.2%), Instant Noodles (59.5%), White Chocolates and wafers (62.6%).

Q3 2019 Updates

Financial Results & Highlights

Standalone Financials (In Crs)

 

Q3FY19

Q3FY18 YoY % Q2FY19 QoQ % 9M FY19 9M FY18 9M% Change
Sales

2972.5

2652.5 12.06% 3006.4 -1.13% 11551.2 10369.1 11.40%

PBT

522.2 477.4 9.38% 671.8 -22.27% 2428.9 1839.3

32.06%

PAT

341.8 311.8 9.62% 446.1 -23.38% 1606.9 1225.2

31.15%

Detailed Results

    1. Total Sales for the company grew 12% YoY with domestic sales growth of 12%.
    2. Operating profit margin stood at 21%.
    3. In 9M19, the company showed sales growth of 11.4% with PBT and PAT rising 32% and 31% respectively YoY.
    4. Export Sales for the company grew 6.9% in 9M19 and accounts for roughly 7% of total sales. They remain subdued due to lower exports to UAE and Bangladesh.
    5. The company is announcing a final dividend of Rs 25 per share.
    6. Operating profit margin and net profit margin have risen 60 bps and 40 bps respectively.
    7. The company market share for various categories are:
      • Infant Cereal: 3%
      • Infant Formula: 5%
      • Tea Creamer: 9%
      • Instant Noodles: 1%
      • Instant Pasta: 9%
      • Chocolate and wafers: 9%
      • Instant Coffee: 5%
      • Ketchup & Sauces: 3%
    8. Net cash generated from operations came to Rs 2052 Cr in the year so far. This has been the highest figure for operating cash flow achieved by the company.
    9. The company had a good year so far with product launches of NESCAFE Ready-to drink cans, NESPLUS, MAGGI Baked Noodles, MAGGI Dip & Spreads, NESCAFE ESmart Coffee and EVERYDAY Chai Life.
    10. This also the first time that the company has crossed Rs 11,000 Cr in 9M revenues.

Analyst’s View

Nestle has been one of the biggest players in the packaged foods space in India. They have a dominant market share in 7 out of their 8 major product categories. The company is growing at a rate of more than 11%. That’s a very good growth performance considering its size, category and market penetration. The chances of a meteoric growth and exponential returns from this company are difficult considering their restricted room to grow domestically given their size and market share in the country. The company still has significant room to grow their revenues by increasing exports given that exports count for only 7% of total sales. However, at the current high valuation, it is prudent to tame return expectations in the near term.

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