Nestle: Resilient margins amid rising cost pressure, higher base

While long-term growth prospects remain intact due to likely lower margin gains ahead, analysts have cut earnings estimates by 2-3 per cent

The Nestlé stock was in demand on Wednesday, despite the company missing estimates for its March quarter (Q1) numbers (company follows January-December accounting period).

While positive management commentary on demand helped, the Street was also a bit surprised with the operating performance, given that many FMCG companies are sacrificing margins for volumes. Nestlé’s top line and net profit grew 9 per cent each year-on-year (YoY) to Rs 2,982.4 crore and Rs 463.3 crore, respectively — a tad lower than analysts’ estimates of Rs 3,055 crore and Rs 471 crore. 

Growth was volume-driven across segments. Although earnings before interest, tax, depreciation and amortisation