The demand for milk-based products and noodles remained strong for the quarter and the price hikes during the quarter are likely to partially contribute to growth, analysts said.
That said, gross margins are expected to contract with the increase in milk prices, even as lower overhead spends would help in curbing operating margins contraction, they said.
Phillip Capital expects Nestle India to report 11.2 per cent YoY rise in net profit Rs 652.60 crore for the third quarter compared with Rs 587.10 crore in the year-ago quarter. Sales are seen rising 12.9 per cent YoY to Rs 3,981.10 crore from Rs 3,525.40 crore. Ebitda margin may fall 26 basis points YoY to 24.8 per cent from 25.1 per cent.
“Domestic volume growth may accelerate, as chocolate consumption comes back and challenges relating to manufacturing ease off. Higher raw material costs may weigh on gross margin. Healthy operating leverage, cost efficiency programme will lead to flat Ebitda margin,” it said.
Sharekhan pegs profit at Rs 619 crore, up 5.4 per cent YoY. It sees sales rising 10 per cent to Rs 3,894 crore. Operating profit margin is seen at 24.5 per cent, down 47 basis points YoY.
“Volume growth is expected to be in the higher single digits. Better supply chain compared to base quarter would lead to strong sales in products such as Maggi Noodles, Maggi Sauces, KitKat, Nestle Munch,” it said.
ICICIdirect sees profit rising 11.4 per cent YoY to Rs 653.80 crore on a 10.9 per cent rise in sales at Rs 3,928.80 crore. HDFC Institutional Equities said investors may watch out for commentary on recovery in trade channels and rural demand, new product pipeline and demand trends in packaged foods.