Nestle India Shares Dip 3.27% After Lackluster Q2 Results Amid Rising Commodity Costs

Nestle India Ltd’s shares have declined by 3.27% following the company’s Q2 FY25 results, which revealed a slight drop in net profit to ₹899 crore, down from ₹908 crore in the same quarter last year. Despite a modest revenue increase of 1.3% to ₹5,104 crore, the company is facing challenges due to muted consumer demand and rising commodity prices, particularly for coffee and cocoa.

Suresh Narayanan, the Chairman and Managing Director, acknowledged the difficult external environment but noted that five of their top 12 brands experienced double-digit growth. He emphasized that 65% of these brands, including MAGGI noodles, saw positive volume growth over the last nine months.

In the broader context, Nestle’s Swiss parent company has announced plans to revamp its leadership structure, cut its full-year sales outlook, and reported disappointing nine-month organic sales growth.

Stock Performance

• 52-week high: ₹2,777 (September 27, 2024)
• 52-week low: ₹2,310 (October 19, 2023)
• Market Capitalization: ₹2,29,956.30 crore
• Year-to-date performance: Down 12.80%, up 2.33% over the past year.
• Return on Equity (ROE): 97.11%

Shareholding Trends

• Promoter holding: 62.76%
• Foreign Institutional Investors (FII/FPI): Decreased from 12.10% to 11.94%
• Mutual Funds: Decreased from 4.45% to 4.37%
• Institutional Investors: Increased from 21.15% to 21.16%
• LIC Stake: 2.40% with 23,094,454 shares.

Analyst Recommendations

• Yes Securities: Buy call with a target price of ₹3,237, citing expected rural growth rebound.
• Axis Securities: Also recommended a buy, targeting ₹2,800.
• A. R. Ramachandran: Noted a bearish but oversold position on daily charts, with resistance at ₹2,465 and next support at ₹2,263.

Given the current performance and analyst outlook, potential investors might consider the buy recommendations, especially in light of anticipated rural recovery. However, caution is advised due to the ongoing pressures on consumer demand and commodity prices.

Disclaimer: This response is for informational purposes only and should not be considered financial advice. Investing in stocks carries risks, and individuals should conduct their own research and consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results.