Nestle needs to sustain strong Q4 performance led by volume growth

Incremental market share gains in noodles, chocolates pose a challenge

Nestlé India shares surged over 4 per cent after its strong December quarter (Q4) results. Led by volume growth and strong sales of Maggi, domestic revenues increased about 11 per cent year-on-year (y-o-y) to Rs 25.89 billion. When adjusted for goods and services tax (GST)-related accounting changes, growth stood at 18 per cent.

Gains at the operating level were stronger, with gross profit margins increasing by 130 basis points (bps) to 58.9 per cent because of benign input costs of sugar, coffee and skimmed milk powder. This coupled with lower other expenses and benefits of leverage helped the company report