Fast moving consumer goods company Nestle India on Tuesday reported a 9.25 per cent year-on-year growth in net profit at Rs 463.28 crore for the first quarter ended March 31, 2019.
The company had posted posted net profit of Rs 424.03 crore in March quarter last year.
The company's revenue from operations rose 8.91 per cent to Rs 3,003 crore from Rs 2,757.24 crore in the corresponding quarter last year.
During the Jan-March 2019 quarter the company faced headwinds on account of higher input costs. This was due to some inflationary pressure in commodities such as milk. The company will take measures to counter such price increase.
Amongst its various brands Maggi, Kitkat and Munch delivered strong growth.
Nestle's results come as somewhat of a relief amid a rural slowdown as reported by most other consumer goods firm in the March quarter.
This is because compared to other firms such as Dabur and HUL, Nestle's exposure to rural markets is less.
Its domestic sales contribute to about 94.2% of its domestic sales. The remaining is from exports. Domestic sales grew by 10% in the year 2018 and is expected to grow at 7% in the year 2019.
The company also announced that it plans to expand its products portfolio in to the organic foods market within categories such as milk and nutrition products. These launches will happen in the coming months. It will be worthwhile to watch how these new products fare in the market. A lot will depend on them considering the stock trades at 52pe multiple - not a very cheap valuation. Also a large percentage of company's sales in India come from Urban Markets - which is comforting - considering that the slowdown is largely rural.
The company had posted posted net profit of Rs 424.03 crore in March quarter last year.
The company's revenue from operations rose 8.91 per cent to Rs 3,003 crore from Rs 2,757.24 crore in the corresponding quarter last year.
During the Jan-March 2019 quarter the company faced headwinds on account of higher input costs. This was due to some inflationary pressure in commodities such as milk. The company will take measures to counter such price increase.
Amongst its various brands Maggi, Kitkat and Munch delivered strong growth.
Nestle's results come as somewhat of a relief amid a rural slowdown as reported by most other consumer goods firm in the March quarter.
This is because compared to other firms such as Dabur and HUL, Nestle's exposure to rural markets is less.
Its domestic sales contribute to about 94.2% of its domestic sales. The remaining is from exports. Domestic sales grew by 10% in the year 2018 and is expected to grow at 7% in the year 2019.
The company also announced that it plans to expand its products portfolio in to the organic foods market within categories such as milk and nutrition products. These launches will happen in the coming months. It will be worthwhile to watch how these new products fare in the market. A lot will depend on them considering the stock trades at 52pe multiple - not a very cheap valuation. Also a large percentage of company's sales in India come from Urban Markets - which is comforting - considering that the slowdown is largely rural.
Nestle India Stock is 2.22 time in last 5 years
(Source: www.nseindia.com)
Nestle India Stock is 4.07 times in the past 9.5 years
(Source: www.nseindia.com)
Our previous blog on Nestle written on 6th March, 2019.
(Disclaimer : For the propose of information only and not to solicit any business or to recommend or advise. I have investments in each of these stocks)
