Continued pressure on Nestle India margins may hurt investor returns

Growth of nearly 10 per cent in top line in the July-September quarter failed to cheer the Street, as higher input costs led to pre-tax profit growth hitting a 10-quarter low of 4.2 per cent

Rich valuations typically indicate strong investor sentiment in favour of a stock, but it also means that there is little room for such companies to disappoint the Street. That seems to be the story of Nestle India, the maker of popular consumer products like Maggi, Kit Kat, Munch and Nescafe. Despite the company outperforming peers in terms of volume and sales growth in the September 2019 quarter, amid a weak consumption environment, the stock of Nestle shed 2.54 per cent to Rs 14,107.50 a share on Monday. Continued input cost pressure, which hurt its overall earnings growth in the September