Nestle India's Q4 result today; Here's what to expect

Nestle India's stock will be in focus as the company is set to announce fourth quarter December 31-ending result on Wednesday.

Nestle India follows the calendar year and not the fiscal year. 

At 10.38 am, the shares of Nestle India were trading flat at Rs 6205.50 per piece on BSE. However, half an hour ago the shares reached over Rs 6252-mark.

Rohit Chordia, Anand Shah and Abhas Gupta analysts at Kotak Institutional Equities in its report stated that they expect five fast moving consumer goods (FMCG) companies, including Nestle, to register positive growth in profit after tax (PAT). 

In terms of revenue, the trio said, “The growth is not comparable due to lower Maggi sales in the base quarter (we model Rs 4.5 billion revenues versus Rs 5 bn in 3QCY16); we expect ex-Maggi portfolio revenues to grow 2% y-o-y (down from 6% in 3QCY16) aided by low base and new launches.”

As per Indian Accounting Standard, Kotak estimates Nestle India's net profit at Rs 228.9 crore up by 10.1% year-on-year (YoY), while revenue is seen at Rs 2,238.7 crore above 15% year-on-year (YoY).

Operating profit (EBITA) is projected to rise at Rs 383.5 crore, rising by 9.8% y-o-y.

Nestle India's gross margin and EBITDA margin is seen negative this Q4. The gross margin is expected to be at 57.6% down 89 basis points yoy and that of EBITDA margins at 17.1% below 81 basis points yoy.

Explaining Kotak said, “We expect GM to contract 90 bps yoy due to inflation in key inputs like sugar, wheat and milk. While EBITDA margin trend not comparable yoy (base quarter witnessed just Rs2 bn Maggi sales).”

During last quarter, Nestle India reported standalone net profit of Rs 269.3 crore, a robust growth of 117%, as compared to Rs 124.2 crore during the same period last year. 

For Q3 performance (July-September), Suresh Narayanan, Chairman and Managing Director of Nestle India, said, "Our growth was broad-based across categories aided by spate of innovations and renovation of over 25 new products launched in the recent past. We are now clearly in the leadership position in the instant noodles category, which indicates consumer confidence and trust in brand Maggi."