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    Nestle India Dupont Analysis

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    INDIAN REALITY SHOWS
    Nestle India is a subsidiary of Nestle SA with a 62% stake. It is one of the largest food companies in India and has a strong market position in categories like culinary products and milk products. For Q4 FY24, Nestle India's domestic sales grew 8.9% driven by price increases rather than volume growth, amid a challenging economic environment. However, the company maintained profitability through cost management and efficiency. While sales growth faces headwinds, Nestle believes in the long-term potential of the Indian market and maintains strong fundamentals with high returns.

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    Nestle India Dupont Analysis

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    INDIAN REALITY SHOWS
    117 views2 pages
    Nestle India is a subsidiary of Nestle SA with a 62% stake. It is one of the largest food companies in India and has a strong market position in categories like culinary products and milk products. For Q4 FY24, Nestle India's domestic sales grew 8.9% driven by price increases rather than volume growth, amid a challenging economic environment. However, the company maintained profitability through cost management and efficiency. While sales growth faces headwinds, Nestle believes in the long-term potential of the Indian market and maintains strong fundamentals with high returns.

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    It's a Dupont Analysis of Nestle

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    Nestle India is a subsidiary of Nestle SA with a 62% stake. It is one of the largest food companies in India and has a strong market position in categories like culinary products and milk products. For Q4 FY24, Nestle India's domestic sales grew 8.9% driven by price increases rather than volume growth, amid a challenging economic environment. However, the company maintained profitability through cost management and efficiency. While sales growth faces headwinds, Nestle believes in the long-term potential of the Indian market and maintains strong fundamentals with high returns.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    117 views2 pages

    Nestle India Dupont Analysis

    Uploaded by

    INDIAN REALITY SHOWS
    Nestle India is a subsidiary of Nestle SA with a 62% stake. It is one of the largest food companies in India and has a strong market position in categories like culinary products and milk products. For Q4 FY24, Nestle India's domestic sales grew 8.9% driven by price increases rather than volume growth, amid a challenging economic environment. However, the company maintained profitability through cost management and efficiency. While sales growth faces headwinds, Nestle believes in the long-term potential of the Indian market and maintains strong fundamentals with high returns.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 2

    Nestle India

    ( NESTLEIND | BSE CODE: 500790 )


    INR 2611.50
    52 Week (High - INR 1788.00 - & Low - 2769.30)

    About the company


    Nestle India, a subsidiary of Nestle SA (with a 62% stake), is the world’s largest food company based on revenue. Established in
    India since 1912, it initially traded as The Nestlé Anglo-Swiss Condensed Milk Company, gradually expanding its presence. The
    company holds strong market positions across various product categories, particularly in culinary products like Maggi, and ranks
    among the top two players in milk products and nutrition, beverages, prepared dishes and cooking aids, and chocolate and
    confectionery.

    Financial Summary

    Revenues (INR Crs.) Net Profit (INR Crs.) Average Total Assets (INR Crs.)
    9,338
    2,391 8,067 8,607
    19,296 2,355 2,356 7,479
    16,897
    14,741
    13,350

    2,082

    2020 2021 2022 2023 2020 2021 2022 2023 2020 2021 2022 2023

    Return on Equity (%) Return on Asset (%) Financial Leverage

    119% 29% 4.07x 3.91x


    109% 3.80x
    106% 28% 28% 3.32x
    84%
    25%

    2020 2021 2022 2023 2020 2021 2022 2023 2020 2021 2022 2023

    Nestle India Ltd.'s Q4 FY24 Performance Overview:


    • Despite a relatively weaker base compared to preceding quarters, Nestle India Ltd.’s sales for Q4 FY24 failed to meet
    expectations. Even with a 8.9% growth in domestic sales, it was primarily driven by price and mix adjustments rather than
    increased volumes, as highlighted in the press release.
    • The management attributed this underperformance to a challenging business environment, reflecting broader economic
    conditions impacting consumer spending patterns.
    • However, amidst the sales disappointment, the company managed to maintain EBITDA and profit after tax in line with
    expectations. This was supported by positive surprises in both gross and EBITDA margins, signaling efficiency in cost
    management and operational performance.
    • Despite the sales setback, the company remains optimistic about the growth potential in the Indian packaged food sector.
    Nestle, alongside Britannia Industries Ltd., has been instrumental in driving growth over the past decade, positioning itself
    at the forefront of industry expansion.
    • Additionally, Nestle continues to exhibit strong fundamentals, including best-of-breed return on capital employed.
    Nevertheless, concerns persist regarding the company's relatively high valuation, currently standing at approximately ~70x,

    Page 1
    Dupont Analysis - Return on Equity & Return on Asset

    Return on Equity (ROE)


    FY2018 FY2019 FY2020 FY2021 FY2022 FY2023
    Net Profit 1606.9 1968.2 2082.4 2354.8 2390.6 2356.1
    Average Shareholder Equity 3547.2 2796.3 1969.1 1982.9 2202.8 2812.6
    Return on Equity 45.30% 70.39% 105.75% 118.76% 108.53% 83.77%

    ROE - Dupont Equation


    FY2018 FY2019 FY2020 FY2021 FY2022 FY2023
    Net Profit 1606.9 1968.2 2082.4 2354.8 2390.6 2356.1
    Revenue 11292.3 12368.9 13350.0 14740.6 16897.0 19296.5
    Net Profit Margin (A) 14.23% 15.91% 15.60% 15.97% 14.15% 12.21%

    Revenue 11292.3 12368.9 13350.0 14740.6 16897.0 19296.5


    Average Total Asset 7725.3 7573.3 7479.0 8067.0 8606.7 9338.3
    Asset Turnover Ratio (B) 1.46x 1.63x 1.79x 1.83x 1.96x 2.07x

    Average Total Asset 7725.3 7573.3 7479.0 8067.0 8606.7 9338.3


    Average Shareholder Equity 3547.2 2796.3 1969.1 1982.9 2202.8 2812.6
    Equity Multiplier (C) 2.18x 2.71x 3.80x 4.07x 3.91x 3.32x

    Return on Equity (A*B*C) 45.30% 70.39% 105.75% 118.76% 108.53% 83.77%

    Return on Asset (ROA)


    FY2018 FY2019 FY2020 FY2021 FY2022 FY2023
    Net Profit 1606.9 1968.2 2082.4 2354.8 2390.6 2356.1
    Average Total Asset 7725.3 7573.3 7479.0 8067.0 8606.7 9338.3
    Return on Asset 20.80% 25.99% 27.84% 29.19% 27.78% 25.23%

    ROA - Dupont Equation


    FY2018 FY2019 FY2020 FY2021 FY2022 FY2023
    Net Profit 1606.9 1968.2 2082.4 2354.8 2390.6 2356.1
    Revenue 11292.3 12368.9 13350.0 14740.6 16897.0 19296.5
    Net Profit Margin (A) 14.23% 15.91% 15.60% 15.97% 14.15% 12.21%

    Revenue 11292.3 12368.9 13350.0 14740.6 16897.0 19296.5


    Average Total Asset 7725.3 7573.3 7479.0 8067.0 8606.7 9338.3
    Asset Turnover Ratio (B) 1.46x 1.63x 1.79x 1.83x 1.96x 2.07x

    Return on Asset (A*B) 20.80% 25.99% 27.84% 29.19% 27.78% 25.23%

    Dupont Summary
    • Nestle's ROE remained stable until FY 2023, dipping slightly to 83.77%, with a decline in net profit margin to 12.21%.
    • Asset efficiency improved notably from 1.46 in 2018 to 2.07 in 2023, potentially boosting profitability.
    • Financial leverage mostly steady but spiked in 2021 before settling at 3.32 in 2023.
    • ROA peaked at 27.84% in 2021 before stabilizing at 25.23% in 2023, suggesting a temporary performance surge.

    Disclaimer: This report is made as a part of educational assignment and is meant for educational purpose only. The author of the report is not liable for any losses due to
    the actions taken basis this report. it is advisable to consult SEBI registered research analyst before making any investments.

    Page 2

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