In a challenging market, Nestle India’s Q2FY25 earnings profit increased but volumes decreased.
For the July–September quarter (Q2FY25), Nestlé India Ltd, the maker of Maggi instant noodles, posted a 1.5% decline in domestic volumes. This number was in a CNBC-TV18 poll that predicted a 1% to 2% increase.
Even so, the business reported a healthy net profit of ₹986 crore, which was 8.5% higher than the forecast of ₹877 crore in the same period last year Revenue rose a modest 1% some, from ₹5,036 crore to ₹5,104 crore, but still below the expected ₹5,357 crore.
Company’s EBITDA (earnings before interest, tax, depreciation, amortization) was ₹1,168 crore, 9.7% lower than the expected ₹1,293.7 crore As a result, the EBITDA margin decreased by 130 basis points to 22.9%; , compared to the expected 24.2%. It’s a low-key one.
Suresh Narayanan, Chairman and Managing Director, Nestlé India, emphasized that several important products have shown resilience to tough market conditions and rising commodity costs. “Five of our top 12 products have grown in double digits,” Narayanan said. But he acknowledged that some businesses were under pressure as customer demand declined. MAGGI noodles and 65% of the company’s flagship brands reported positive volume growth over the past nine months, which is encouraging.
E-commerce continued to be a bright spot, generating 8.3% of domestic sales with double-digit growth, the highest quarterly performance. Through its transformed divisions and urbanization, Nestlé’s out-of-home division has achieved double-digit growth and remains a strong business.
Commodity Outlook:
Rising commodity prices, especially for coffee, cocoa, rice and edible oils, remain a problem for Nestlé. The good news is that the cost of milk and packaging changes dramatically. Naveen Kulkarni, CIO, Axis Securities PMS, is cautiously optimistic about future performance but expects rising commodity prices to continue to put pressure on margins.
After the earnings announcement, shares of Nestle India fell 3.79% to ₹2,373 on the NSE, despite a strong profit showing.
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