Nestlé India Ltd announced on Thursday a robust 26.8% increase in profit for the January-March period, surpassing market expectations, buoyed by lower milk prices. Quarterly revenue from operations also saw a healthy growth of 9%, reaching ₹5,267.59 crore. According to the company’s filing to the exchanges, profit for the period amounted to ₹934 crore, a significant rise from ₹736.6 crore reported in the corresponding period last year.
Additionally, Nestlé India’s Ebitda margin expanded by 2.41 percentage points to 25.4% in the final quarter of FY24. Ebitda, which stands for earnings before interest, taxes, depreciation, and amortization, serves as a measure of operating profitability.
“I am pleased to share that we have delivered double-digit growth, despite challenges posed by rising food inflation and volatile commodity prices. We have witnessed a strong growth momentum across our product portfolio led by a combination of pricing and mix,” Suresh Narayanan, chairman and managing director, Nestlé India, said.
However, the company cautioned about “unprecedented headwinds” in the prices of essential commodities like coffee and cocoa, citing all-time-high prices and an ongoing price rally. It noted that cereals and grains are experiencing a structural cost increase supported by Minimum Support Price (MSP), while milk prices are anticipated to escalate due to the expected harsh summer conditions.
On Thursday, the company also unveiled a definitive agreement to establish a joint venture with Dr. Reddy’s Laboratories Ltd to introduce nutraceutical brands to consumers in India and other agreed-upon territories. Under the arrangement, Dr. Reddy’s will hold a 51% stake, with Nestlé India owning 49% in the joint venture (JV) firm. Nestlé India will possess a call option to boost its shareholding to up to 60% after six years at a fair market value. Dr. Reddy’s will maintain a minimum of 40% of the shareholding even after Nestlé India exercises its call option.
Nestlé India stated in a release, “The partnership will merge a global range of nutritional health solutions, including vitamins, minerals, herbals, and supplements from Nestlé Health Science (NHSc), with the robust and established commercial strengths of Dr. Reddy’s in India.”
Headquartered in Hyderabad, the newly formed company will leverage the capabilities and services of both the Nestlé Group and Dr. Reddy’s. Certain brands will be licensed by the two companies to the JV entity. Nestlé will license brands such as Nature’s Bounty, Osteo Bi-Flex, and Ester-C, while Dr. Reddy’s will license brands like Rebalanz, Celevida, Antoxid, Kidrich-D3, and Becozinc in the nutrition and over-the-counter segments. The company is slated to commence operations in the second quarter of FY25.
