Nestle India Q2 Review - Margins Hurt But Growth Momentum Improved: Nirmal Bang


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Nestle India Ltd.’s Q2 CY22 revenue surprised us positively while margins took a bigger hit than we had expected. Domestic sales picked up pace in Q2 CY22 with the topline growing by 16.4% YoY to Rs 38.5 billion, ahead of our estimate (three-year compound annual growth rate of 10.7%).

Growth was broad-based, primarily driven by pricing, but three-year CAGR in volume stood at a healthy ~6%. Exports (~4% of sales) stood flat YoY at Rs 1.6 billion.

Through project rurban, Nestle India had embarked on a journey to enhance its distribution in semi-urban and rural areas.

This is getting reflected in the H1 CY22 performance as the company has seen strong momentum in mega cities and metros, besides also witnessing strong acceleration across smaller town classes. It also saw a smart uptick in sales in rural markets this quarter.

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