Nestle India reports good results for Quarter ending September 2020, declares Rs.135 per share interim dividend.

Interim Dividend

Nestle India announced results for the quarter ended September 2020 (Q3CY20). The board has declared an interim dividend for 2020 of Rs 135 per equity share amounting to Rs 1,302 crore, which will be paid on and from November 20, 2020.

Quarterly Numbers 

The packaged foods company’s total sales and domestic sales both increased by 10.2 per cent, driven by volume and mix. 

Export sales increased by 9.4 per cent. 

The company stated that double-digit growth was seen in the Noodles, Coffee, and Chocolates categories.

However, the company reported flat net profit of Rs 587 crore in Q3CY20 against Rs 595 crore in Q3CY19 due to lower effective tax rate in the base. Ebitda (earnings before interest, taxes, depreciation, and amortization) margin improved to 24.2 per cent from 23.1 per cent during the quarter.

The net profit after tax are not comparable as the cumulative effect of lower tax rate made applicable from April 1, 2019 was adjusted fully in quarter ended September 2019, the company said.

After a blip in Q2CY20 (led by supply-chain issues), the company resumed double-digit sales growth in Q3CY20 – which appears likely to sustain given the continued benefits of an in-home consumption boost. Lower milk, wheat, and sugar costs also led to sequential gross margin improvement. Consequently, Ebitda also grew in double-digits, a first after seven quarters, Motilal Oswal Securities said.

Expansion plans

The company announced a capex of Rs 2,600 crore over the next 3–4 years would boost longer-term growth prospects. However, it also signifies an end to the sweet spot that the company enjoyed until CY19, when it was able to take advantage of erstwhile significantly underutilized capacity. It benefited particularly after the resumption of strong sales growth, driven by a change in leadership post the Maggi crisis in 2015, the brokerage firm said with ‘neutral’ rating on the stock.

Nestle India stock - past 5 years 

Nestle India stock - past 1 year 

Nestle India's Business 

Nestle India Ltd, one the biggest players in FMCG segment, has a presence in milk & nutrition, beverages, prepared dishes & cooking aids & chocolate & confectionery segments.

The company is engaged in food business under the following categories 

1.  milk products and nutrition,
2.  beverages,
3.  prepared dishes and cooking aids,
4.  chocolates and confectionery.

 Nestle India manufactures products under brand names, such as

1.  Nescafe,
2.  Maggi,
3.  Milkybar,
4.  Milo,
5.  Kit Kat,
6.  Bar-One,
7.  Milkmaid.

Nestle India is a subsidiary of Nestle S.A. of SwitzerlandThe company has presence across India with 8 manufacturing facilities and four branch offices spread across the region.

The company's head office is located in Gurgaon, Haryana.Nestle India Ltd was incorporated in the year 1956.

(disclaimer : This blog is for information purposes only and not to solicit any business or provide any advise)