Nestle India Q1CY23 Results: Here’s What Brokerages Say; check details

Net profit for Q1CY23 stood at 736 crore as against 590 crore as reported a year ago. The company said in an exchange filing that it reported a 21% increase in operating revenue 4,830.53 crores. The company earned revenue from the operations of 3,992.6 crore during the same period last year.

The maker of Maggi noodles claimed double-digit growth across all product categories, supported by a robust growth in both urban and rural markets. Volume increased 11% for the full quarter.

In Wednesday’s trade, the company’s shares were trading near their 52-week high, recorded on October 24, 2022. The stock price gained 15% and outperformed its sector by 3.3% over the past year.

“It has crossed the October 2022 swing high to mark new highs, the overall bias is positive. 20,500 is the support level and 21,800 is the resistance level,” said Rajesh Bhosale, Equity Technical & Derivatives Analyst, Angel One.

shares of Nestle India closed 1.8% higher on Wednesday 21,026.25 per share.

Let us see what the brokerage has to say about the Q1CY23 performance of the company.

Nuwama Institutional Equities

The brokerage house believes that the company has made a great start to the year.

Revenue climbed 21% year-on-year (YoY) in Q1CY23, the highest percentage in the last ten years. EBITDA/PAT climbed 19%/24%, which exceeded both brokerage and market average estimates. Volume growth is 11% year-on-year without taking into account the impact of Maggi’s smaller packs. All merchandise saw double-digit growth in sales. Rural development was quantity-driven. Gross/EBITDA margin decreased by 159 basis points/40 basis points, due to price increase in Dairy and Coffee.

“We expect the growth momentum to be sustained as Nestlé continues to expand portfolio (having launched ThickenUp Clear, a food and beverage thickener from the Nestlé Health Sciences portfolio) and distribution. With a revised target price of Q1CY25E, we expect are roll-forward. 24,965 (earlier 23,435). We maintain ‘Buy’ rating,” the brokerage said.

The brokerage also claimed that the softening in packaging material and edible oil would benefit the company. However, the prices of fresh milk and green coffee are expected to remain stable. Quick commerce, out-of-home (OOH) and e-commerce are expected to perform strongly.

Motilal Oswal

The brokerage said in its report that this is a major achievement by the company in a challenging environment.

“The company’s 1QCY23 numbers beat our expectations on all parameters with an overall sales growth of 21% as compared to our estimate of 9%. This was driven by a sharp uptick in OOH business during the quarter as well as double-digit growth across product categories led by better mix, healthy volumes and better pricing,” the brokerage said in its report.

The brokerage claims that no significant adjustments have been made to its CY23 and CY24 EPS predictions. The long-term growth story for revenue and earnings is compelling. In India, there is immense scope for expansion in the packaged food market. This is especially true for a business like NEST, which has a solid history and distribution capabilities. Additionally, the recent success of its volume-based growth approach lends execution confidence.

“The company’s valuation is expensive at 57.6 times CY24E Price-to-Earnings (P/E) and does not offer any significant upside from a one-year perspective. We value the company at 55 March 25E Earnings Per Share (EPS) reach our target price of . 20,500. We reiterate our ‘Neutral’ rating on the stock,” the brokerage said.