Nestle India is scheduled to announce its March quarter results of the financial year 2019-20 (FY20) on May 12, Tuesday. The FMCG major, as per analysts, is likely to see a decline in key parameters - revenue, EBITDA, and net profit on an annual basis due to Covid-19 lockdown. However, strong demand for packaged food will cap the impact of lockdown, they say.
Here's a look at what top brokerages expect from Nestle India Q1 numbers -
Emkay Global Financial Services
The brokerage expects net sales (revenue) to decline 3 per cent year-on-year (YoY) and 7.5 per cent quarter-on-quarter (QoQ) to Rs 2,912.9 crore. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) are seen declining 3.1 per cent YoY to Rs 695.9 crore. On sequential basis, however, the numbers are expected to grow 8 per cent. EBITDA margin is expected to remain unchanged on YoY basis at 23.9 per cent. Sequentially, it is estimated to rise by 342 basis points (bps). Net profit (profit after tax) is expected to grow 5.5 per cent YoY and 5.9 per cent QoQ at Rs 497.1 crore.
The brokerage estimates estimate revenue, EBITDA and PAT to dip 5.8 per cent, 21.9 per cent and 15.4 per cent, respectively, YoY to Rs 2,827.6 crore, Rs 593.8 crore, and Rs 391.8 crore for the quarter under review. "Nestle is likely to see around 5 per cent YoY dip in domestic revenues on a base of 10.2 per cent. Export revenue growth is likely to decline by 20 per cent YoY on a base of 8.9 per cent. Raw material (RM) prices has seen inflationary pressure which will put pressure on gross margins (160bps YoY); however, no operating leverage will lead to EBITDA margins compression of nearly 430bps YoY," the brokerage said.
The brokerage models 5.5 per cent growth in net domestic revenues, broad-based across segments. For exports, it has built in a 5 per cent growth (versus a decline for the last few quarters) with the base turning favorable. Net sales is seen at Rs 3,170.6 crore, up 5.6 per cent YoY and 0.7 per cent QoQ. EBITDA is expected to decline 1 per cent YoY at Rs 742 crore. On a sequential basis, the numbers are likely to grow 10.3 per cent. EBITDA margin is seen at 23.4 per cent, down 156 bps YoY and 203 bps QoQ. PAT is expected to rise 9 per cent YoY and 6.7 per cent QoQ to Rs 504.9 crore.
The brokerage expects 1 per cent YoY revenue decline at Rs 2,950 crore. Sequentially, numbers are expected to fall by 5.7 per cent. The brokerage notes that healthy demand for packaged food will limit the impact of lockdown. EBITDA is seen at Rs 720 crore, up 4.3 per cent QoQ and down 5.8 per cent YoY. EBITDA margin is seen at 24.1 per cent, up 230 bps QoQ and down 122 bps YoY. Adjusted PAT is expected to grow 6.4 per cent QoQ to Rs 500 crore. On YoY basis, the numbers are expected to rise 8.7 per cent.
Investor interest: Commentary on recovery in trade channels and rural demand and new product pipeline are some of the key things to watch out for.