← Throughline · holding view Deep analysis ↗ Q3 FY25
NESTLEIND Nestle India Ltd · FMCG Q3 FY25 · concall
Pattern: quantum price hike maintain

Refused to commit on margin band over next.

1 deflection · 1 weak · 13 clean — pushback across 2 of 15 Q&A turns

Focused evidence 2 of 15

Mihir · Nomuraweak

Quantum of price hike still required to maintain margins? Pricing growth momentum from here?

Coffee point-to-point +75% - very difficult to absorb fully via SHARK. Doubled Nanjangud capacity; some efficiency, some flow into value chain. 'On coffees where you can expect some amount of pricing pressure to be there.' Other categories - pressures less, lower order than 2022-2023.

Harit Kapoor · deflection

Margin dynamic next 12-24 months - stabilize at current profitability to drive volume/revenue growth?

I would say that I am no one and we do not give forward guidance in any case as far as the results are concerned. But the current profitability levels are kind of optimally placed in order to support the growth journey of the company. That is where I would be. If inflation exacerbates, then the equation changes dramatically.

▸ Other Q&A (13)
Mihir · Nomura

Milk and nutrition category seems to have declined - what is ailing it? Competition? High prices? Steps being taken?

Milk and nutrition hit very strongly by inflation; price increases restricted volume growth. Segment open to competition from cooperatives. Steps: baby food no refined sugar (well below 40% of allowed max); greater focus on portfolio. Mature category - short window for consumer in/out unlike MAGGI/KITKAT/NESCAFE. Confident category will come back.

Abneesh · Nuvama

Channel balance differentiation - profit margins quick commerce vs kirana, mix, working capital?

Combination of portfolio pricing, curated promotions, calibrated price-size by channel. Internal cap on channel weighting. Traditional trade gets countervailing balance. Net returns not adversarial: 'we are not bleeding, neither are we making more.' 75-80% of sales from traditional trade still.

Abneesh · Nuvama

940 Nestle Kiosk - franchise model? Out-of-home growth segments and significance?

All franchised, with larger franchises holding 5-10 kiosks each. Self-sustaining P&L for franchisee; Nestle manages design/quality/recipes/hygiene. Last 2-3 years almost doubled kiosks. More tourism scope. Significant for trial/marketing not revenue.

Latika ·

Market shares in noodles, chocolates, baby foods - competitive dynamics?

Noodles ~60% range stable. Baby foods stable; category may have shrunk on inflation but Nestle leadership intact. Chocolates: distinct #2 to Mondelez; KITKAT and MUNCH wafer-share up. Coffee: market leader.

Latika ·

60% growth from core - innovation thoughts; new sub-segments scaling; mindset on inorganic India growth?

Appetite for inorganic growth continues but nothing fructified. Interest continues. Protected core during slowdown + commodity inflation. Breakfast cereals doing well - now #2 to Kellogg's in single-serve packs. Other priorities tackled first.

Latika ·

Distribution reach 5.5M - more numeric expansion or focus on throughput?

Still feasible to grow ~6 million outlets ballpark in coming years. But depth of penetration is the name of the game - frequency, variety of portfolio, price points.

Arnab · Goldman Sachs

MAGGI consistent growth slowdown last year - macro, snacking competition, regional players, or quick commerce?

All of the above. Price inflation Rs.5 to Rs.7 pushed volume down. Snacking space exploded - biscuits, chips, other snack forms. Regional first-hits impact MAGGI as biggest player. Steps: innovation, activation, penetration, geographic strategies, clusterization. 'We are turning back to growth and turning back to better days.'

Arnab · Goldman Sachs

Milk and nutrition 4-5 year volume growth - what needs to change?

Breast milk best for mothers - established standard. As incomes rise, women workforce participation increases, inflation abates - positive momentum. Category will come back to volume growth but not MAGGI/chocolate-like - limited lifespan product (2-3% over 1-2 year period).

Awais Bakshi · Sundaram Mutual Fund

Milk nutrition competitive intensity - is it the case for incumbents too or is Nestle's positioning at lower-end facing higher competition?

Highly regulated category - media-dark, consumer-dark. New entrants face greater challenges. Mid-price segment has most challenges. Premium milks/nutrition growths encouraging. Volume growths will be modest, value growths neat and significant.

Avi Mehta ·

Premiumization and innovation imply smaller bets vs one large bet - is organization geared for this complexity?

Days of single large bets in consumer goods are over. Multiple smaller bets contribute now. Organization capable of taking complexity - if 50-60 ideas, prune to 15-20. Calibrate big-ticket items - 5 in 2025, 10 in 2026 etc. Small organization thinking within large company. Constraint: sustainable level of investment/support per brand, not supply chain. Won't divert investments from core.

Avi Mehta ·

Number 15 constrained based on front-end or supply chain manufacturing?

Not really supply chain end - supply chain can manage. Question is sustainable level of investment and support to provide. All brands need certain threshold support to justify growth/profitability equation. Calibration so core not collapsed.

Questioner ·

Volume under pressure due to commodity-led pricing - on deflation reversal what is pricing strategy?

Pricing is last lever - astute buying/economies, material usage improvements, asset utilization first. Volumes dented by pricing taken. If commodities stabilize, restore volume-led growth dynamics. 'about 9% has been volume, so 2% has been pricing. Now it is the other way around.' If situation doesn't improve, market dynamics change.

▸ Prepared remarks (3 blocks)
'A Path to Progress.' Succession quarter - Manish Tiwari introduced as successor CEO 48 hours into role. 113 years in India, 8,700+ employees, 547,000+ shareholders (post share split from 170K), <strong>14 million</strong> societal-initiative beneficiaries, 10,000+ distributors and re-distributors, 5.3 million outlets total reach, 280,000 farmers, 9 factories with 10th in Odisha. Capex 2020-2025: ~INR 5,800 crores; capex/sales from 1.8% (CY2015) to 7.7% (FY23-24). Sanand 3rd confectionery factory operating (after Ponda, Tahliwal). Capacity expansion since 2020 >35% for MAGGI/coffee/chocolates. Financial performance: turnover +134% 2015 to FY23-24 (11.2% CAGR adjusted for 15-month period); profit from operations 15.1% CAGR; market cap +273%. Outperformed listed peers - Nestle 11.2% vs peer 10.5% organic growth; PAT 23.2% vs 11.2%. Product mix: M&N 39% (+6%), PDCA 31% (+19%), Confectionery 16% (+14%), PLB. Long-term volume growth 9.5% CAGR 2015-2023. RURBAN: 200,000+ villages covered (vs 70,000 in 2020); distribution touch points 12,000 to 21,000; 7,400 towns. 5.3 million outlets; in 2024 highest gain among peers ~5% added (post-MAGGI crisis recovery from 4M -> 5.3M). 51% of media spends digital (up from <half five years ago). Digital media spend +126% since 2020. Households: Maggi 50% of HH; coffee +130% growth 2016-2024 (~30% HH). Reaches 2 of 3 households (80% urban, 60% rural). E-commerce 8.5% contribution growing 33%; quick commerce reshaped supply chain.
coffee +75% point-to-point YoY; cocoa +40-50%; wheat firming; milk relatively stable. SHARK programme 7,700 projects since 2016 generating 1-2% of sales savings. Innovation: 1.5% (2016) to 6.5% (9M FY25); 150 new products in 9 years; 16-20 more on anvil; ambition 10%. Volume mix flipped: historical 11.2% CAGR was 9% volume + 2% pricing, now reverse. Premiumization: ~INR 7,500 cr opportunity in categories, 16% CAGR since 2015. Out-of-Home: 940+ One Nestle kiosks, 20 million walk-ins, business doubling by 2030 (~$25-30B market). Strategic announcements: NESPRESSO India launch with George Clooney commercial; Dr. Reddy's 49-51 JV (Nestle Health Science); INR 24,000 cr healthcare opportunity. Sustainability: GHG -61% (since 2008), energy -29%, water -50%, wastewater -60%, plastic neutral since 2020. Coffee 55% sustainably procured with Rs.3-4/kg premium to farmer. Operating margin 16.5% (10y ago) -> 21-22% band currently (~500 bps improvement). 9M FY25 impacted by slowdown and commodity inflation forcing price hikes. ROE best-in-class. Total shareholder return +314% 2015-2023; 17.1% annualized; 3.1x operating cash flow generated.
FY23-24 (15-month period): Turnover +<strong>134%</strong> over 2015 (11.2% CAGR adjusted). Profit from operations 15.1% CAGR. Market cap +273%; total shareholder return +314% (17.1% annualized); 3.1x operating cash flow. Operating margin band 20-21% currently (vs 16.5% 10 years ago, ~500 bps improvement). 9M FY25 profitability impacted by slowdown plus commodity inflation. Capex 2020-2025: INR 5,800 crores. Capex/sales: 1.8% (CY2015) to 7.7% (FY23-24). Volume CAGR 2015-2023: 9.5%. Volume / pricing mix flipped: 11.2% historical = 9% volume + 2% pricing; now reverse (2% volume + bulk pricing). Innovation 6.5% of sales (vs ambition 10%). Coffee point-to-point inflation +75% YoY. E-commerce 8.5% of sales growing 33%. SHARK: 7,700 projects, savings 1-2% of sales.
Watch next