Nestle India announced its second-quarter earnings, reporting a significant rise in net profit, yet its stock experienced a notable decline on Thursday.
Q2 Financial Highlights
The consumer goods giant posted a net profit of ₹1,026.8 crore for the quarter, marking a substantial 36.3% increase compared to ₹753.2 crore in the corresponding period last year. Total sales also saw robust growth, climbing 20.5% to ₹6,782.2 crore, up from ₹5,630.2 crore a year ago. Domestic sales growth contributed significantly with a 20.4% rise.
Earnings per share (EPS) stood at ₹5.32, an improvement from ₹3.90 in the year-ago quarter, while EBITDA margins were reported at 23.8%.
Stock Performance
Despite the strong financial performance, Nestle India's shares fell 9% to ₹1,259 during afternoon trading, down from their previous close of ₹1,384.15. This drop led to the company's market capitalization slipping to ₹2.53 lakh crore.
Management Commentary and Outlook
Manish Tiwary, Chairman and Managing Director of Nestle India, expressed satisfaction with the results. "I am pleased to share that the quarter saw a continuation of strong and broad-based growth across all product groups, with total sales reaching Rs 6,782.2 crore, with a growth of 20.5%, that was driven by robust, double-digit volume growth," Tiwary stated. He also highlighted the company's focus on operational efficiencies and a significant 46% increase in advertising and marketing investments.
Regarding commodity prices, Nestle India anticipates coffee and wheat to remain range-bound. Sugar and edible oils have stabilized at elevated levels, while cocoa continues to exhibit volatility due to weather-related crop concerns in key producing regions. Milk prices have seasonally strengthened but are expected to ease with the arrival of flush supplies.