Nestle Q2 preview: Profit may rise up to 8% YoY, revenue 5-7%, say analysts

Nestle India Q2 results preview: Investors will monitor the demand outlook on rural against urban, competitive intensity and raw material trends for Nestle India

Nestle India Q2 results preview: Maggi and KitKat maker, Nestle India, is slated to report its quarterly results for July-September period (Q2FY25) on Thursday, October 17, 2024.

Ahead of the results, brokerages tracked by Business Standard have said that the fast-moving consumer goods (FMCG) giant's adjusted profit is expected to increase 7 to 8 per cent to Rs 876 crore as against Rs 805.5 crore seen a year ago. 

Operationally, Nestle India's revenue is expected to grow in a range of 5 to 7 per cent year-on-year (Y-o-Y) to Rs 5,333.05 crore, as against Rs 5,010 crore in Q2FY24, on the back of price hikes taken by the company. Its quarter-on-quarter (Q-o-Q) revenue growth is seen at 11.2 per cent from Rs 4,793 crore in the June quarter.

Analysts said investors should keep an eye on the demand outlook on rural against urban, competitive intensity, and raw material trends.

Here’s what key brokerages expect from Nestle India's Q2 results:

Axis Securities: Analysts believe that Nestle India's revenue could grow to Rs 5,318 crore in Q2FY25, as against Rs 5,010 crore a year ago, largely led by price hikes. This implies a rise of 6.2 per cent Y-o-Y. On a quarterly basis, revenue is seen rising 10.9 per cent.

Additionally, they expect Ebitda to come at Rs 1,258 crore as against Rs 1,225 crore Y-o-Y. Ebitda is earnings before interest, tax, depreciation and amortisation.

Nestle India's Ebitda margin, however, is expected to decline Y-o-Y to 23.7 per cent from 24.5 per cent due to inflation in coffee and cocoa prices. 

Its profit after tax (PAT) is likely to decline on account of exceptional items, but adjusted PAT is likely to rise 7 per cent Y-o-Y, as per analysts.

PAT for the quarter is estimated at Rs 852 crore as against Rs 908 crore a year ago. 

Motilal Oswal Financial Services: The brokerage believes Nestle India's sales growth momentum will continue during the period under review as the company has implemented a price hike in response to rising commodity prices. 

The net sales for the second quarter is expected at Rs 5,345 crore, up from Rs 4,658.5 crore reported a year ago, which translates to a rise of 6.1 per cent.

Further, Motilal Oswal analysts anticipate a moderate expansion of 30 basis points (bps) Y-o-Y in Ebitda margin to 25.1 per cent from 24.8 per cent. 

Meanwhile, as per the report, the company will continue to focus on expanding its distribution reach.

Kotak Institutional Equities: Analysts at Kotak Institutional Equities estimate around 7 per cent Y-o-Y growth in net revenues, led by 7 per cent/8 per cent growth in domestic/exports. 

The revenue is estimated at Rs 5,362 crore compared to Rs 5,037 crore a year ago.  

They expect volume (tonnage) growth at 2-3 per cent, marking some improvement from the last quarter. This is on the back of a 4-5 per cent increase in pricing growth, which would be partly driven by price hikes in chocolates and coffee. 

On the flipside, as per analysts, the volume growth may be impacted by external challenges such as lower consumption growth, concerns about continued food inflation, and volatile commodity prices. 

Nuvama Institutional Equities: The brokerage believes Nestle India is seeing some slowdown in Maggi noodles and infant nutrition. Moreover, cocoa and coffee costs may remain a worry now, but Nuvama analysts estimate a gradual pass-through to end consumers.

Further, it expects, revenue/Ebitda/volume to grow 4.9 per cent/5 per cent/3 per cent Y-o-Y. The brokerage has estimated revenue for the September quarter at Rs 5,282 crore, and Ebitda at Rs 1,286.7 crore.