InvestorQ : How do you see the Nestle stock after the latest results announced for the Sep-20 quarter?
vaishnavi mhatre made post

How do you see the Nestle stock after the latest results announced for the Sep-20 quarter?

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vidhya Laxmi answered.
3 months ago
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Nestle went through a tough period post 2015 but the results in the last few quarters have shown that the company is back to dominating the FMCG premium food segment, with leadership in its Maggi Noodles and Nescafe brands.

For the Sep-20 quarter, Nestle reported 10.13% increase in sales revenues at Rs.3,542 crore. For the same period, the operating profits were up also by 17.68% at Rs.792 crore while the net profit was lower by 1.40% at Rs.587 crore on the back of all round brand growth.

Margins also expanded for the quarter. For the Sep-20 quarter, operating profit margins or OPM was 145 bps better at 22.38% while net profit margins or NPM was 194 bps down at 16.58% due to higher input costs. This was the only flaw in the results for the quarter.

Nestle has recovered appreciably from a temporary sales slowdown in the Jun-20 quarter and has bettered pre-COVID sales levels. During the Sep-20 quarter, Nestle witnessed double digit growth in its key brands plus a spurt in in-home consumption. Internet sales accounted for 4% and doubled yoy.

In terms of future outlook, what is impressive is that Nestle plans to consolidate on double digit growth by investing up to Rs.2,600 crore by 2024 in a bid to deepen the market penetration. That should be value accretive for the stock, despite rich valuations.

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