Nestle has again outperformed FMCG cos this qtr

Preeyam Tolia, Equity Research Analyst – FMCG & Retail, Axis Securities, says “we have to look at Nestle‘s raw materials as a basket. Coffee prices are volatile but at the same time, other raw materials, such as palm oil and milk prices are likely to remain stable. We do not expect much impact on overall margins going forward. Overall the basket remains stable for Nestle.”



We have seen a spike in Nestle’s numbers. How are you looking at the numbers in terms of your expectations? What is the volume growth number that is likely as of now?

Preeyam Tolia: The Nestle numbers look good, in terms of our expectations. There are some slight misses, but it is okay. But numbers are strong, in terms of the overall performance. Also, when we compare to the other FMCG companies, Nestle, like the previous quarter as well, has outperformed overall. We expected mid-single digit volume growth, in terms of the Q3 results.

In terms of coffee prices, it continues to be a bit volatile. In terms of the concern that is there, do you think it could be a concern for Nestle going forward? How are you looking at that?

Preeyam Tolia: If you see the overall basket, we have to look at Nestle’s raw materials as a basket. So yes, there is volatility in terms of the coffee prices but at the same time, other raw materials, such as palm oil and also the milk prices are likely to remain stable. We do not expect much impact on overall margins going forward. But overall the basket remains stable for Nestle.

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