homemarket Newsstocks News

Nestle declines 5% as December quarter earnings miss estimates; Credit Suisse downgrades stock

Nestle declines 5% as December quarter earnings miss estimates; Credit Suisse downgrades stock

Nestle declines 5% as December quarter earnings miss estimates; Credit Suisse downgrades stock
Profile image

By Pranati Deva  Feb 17, 2021 10:32:32 AM IST (Published)

In the last 1 year, the firm has seen a flat performance as compared to a 26 percent rise in Nifty50.

Shares of FMCG major Nestle fell 5 percent on Wednesday after the firm posted a 2.3 percent year-on-year (YoY) growth in profit in the December quarter, missing analysts' expectations.

Recommended Articles

View All

Profit in the quarter under review came in at Rs 483.3 crore versus Rs 472.6 crore year-ago period. The company follows the calendar year as its financial year.
The stock fell as much as 5 percent to the day's low of Rs 16,360 per share on the BSE. In the last 1 year, the firm has seen a flat performance as compared to a 26 percent rise in Nifty50.
It has also underperformed its peers with ITC up 6 percent, Dabur up 5 percent and Britannia 10 percent in the last 1 year. HUL was the only peer to report a negative performance for the period, down 3 percent.
The sentiment was also weighed after global brokerage Credit Suisse downgraded the stock to 'neutral' on stretched valuations after its Q4 earnings. As per the brokerage, the firm sees a steady double-digit growth but there is limited room for any surprise going ahead.
It also cut earnings estimates for the stock for 2021-22 by 3-4 percent but remains positive on the company's long-term prospects.
Meanwhile, another brokerage house Jefferies also retained a 'hold' rating on the stock. It noted that the firm's Q4 domestic revenue growth was similar to the earlier quarter. Margin barely moved up and came in below estimates, it added.
A higher tax rate led to near flat earnings, it further observed.
Revenue from operations for the firm grew by 9 percent YoY in Q4 to Rs 3,432.6 crore, driven by domestic sales that increased 10.1 percent to Rs 3,260.7 crore. However, the firm's exports declined 7.7 percent to Rs 156.82 crore in Q4.
"Domestic sales growth is broad-based largely driven by volume & mix. Demand in the Out of Home channel further improved in the quarter but continues to be impacted by COVID. Export Sales were lower due to lower coffee exports," Nestle said in its BSE filing.
It also recommended a final dividend of Rs 65 per equity share amounting to Rs 626.7 crore for the year 2020.
For 2020, the company reported a 5.8 percent rise in profit at Rs 2,082.43 crore and a 7.9 percent growth in revenue at Rs 13,350.03 crore compared to the previous year.
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!

Top Budget Opinions

    Most Read

    Market Movers

    View All
    Top GainersTop Losers
    CurrencyCommodities
    CompanyPriceChng%Chng