Nestle Q4 Results: Topline rises but bottom-line misses estimates

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Nsetle Q4

Net Profit decline - Nestle India reported a net profit of Rs 386.66 crore, down 19.99% YoY. In the year-ago period, the company reported a net profit of Rs 483.31 crore. The net profit is below the street estimate of Rs 522 crore. High inflation in its key raw and packaging materials are at 10-year highs, and it led to lower profits. The bottomline was hurt by a one-time loss of Rs 236 crore on account of past service costs. Profit before exceptional items and tax came in at Rs 743 crore. 

Revenue increase - The company reported a revenue of Rs 3,706.20 crore in Q4'21, up 8.44% YoY. In Q4 '20, the company reported revenue of Rs 3,417.52 crore. The revenue is in line with the street estimate of Rs 3784 crore.

Other Updates - The total expenses in the October-December quarter, were up 8.23% to Rs 3,022.97 crore, as against Rs 2,793.01 crore in the year-ago period. 

Nestle Q4 results: Highlights

The company's exports were down 6.63% to Rs 146.42 crore, as against Rs 156.82 crore of the corresponding quarter. Total sales and domestic sales for 2021 increased by 10.1% and 10.7%, respectively.

New factory - Nestlé India announced that Sanand Factory in Gujarat is fully operational and meeting the highest standards. The company said that it is a matter of great pride that about 62% of the factory workforce are women and it is a digitally and environmentally advanced factory.

E-commerce: The channel showed strong acceleration on the back of convenience and pandemic-driven consumer behavior, fully leveraged by Nestlé India through meaningful shopper insights, data analytics, speed, sharp communication, and customization for the channel.

Dividend - The company's Board of Directors recommended a final dividend of Rs 65 per equity share for the year 2021. The record date for the purpose will be April 8. It will be paid on and from April 26.

Nestle Q4 earnings: Brokerage View

Edelweiss has a BUY call on Nestle India Ltd. with a target price of Rs 21,300.  The current market price of Nestle India Ltd is Rs 18,205.

Nestle Q4 Results Review

The topline of Nestle India is in line with a street estimate but the bottom-line missed the estimate and also declined YoY. The challenge for the company is an increase in raw material prices. However, the management remains confident and will try to optimize costs to mitigate the impact. The topline was driven by the increase in revenues in the domestic markets due to a rise in out-of-home consumption. Though, exports declined on a year-on-year basis.