Nestle India reported a bigger-than-expected rise in third-quarter profit on Wednesday, benefiting from price increases and a rebound in demand for its chocolates and packaged foods in rural areas.
The Maggi noodles maker’s profit rose 8.3% to Rs 668 crore ($81.1 million) in the quarter ended Sept. 30.
Analysts on average were expecting a profit of Rs 657 crore, according to IBES data from Refinitiv.
Revenue from operations climbed 18.3% to Rs 4,591 crore as sales of its chocolates, Maggi noodles as well as Sunrise and Nescafe brands of coffee rose, helped by robust advertising spend.
“Growth has been very strong in the large metros and mega cities and continued to be robust across smaller town classes, including rural markets,” Nestle India Managing Director Suresh Narayanan said in a statement.
The lingering impact of COVID-19 lockdowns and high cost of living had forced Indians in rural pockets to rein in their spending, affecting the bottom-line for consumer packaged goods makers for nearly a year.
However, analysts says that certain categories, including noodles and biscuits, defied the trend as people consider such items small treats during economic downturns, adding to Nestle’s resilient urban sales momentum.
The easing of raw material prices, including oil, will likely help drive earnings further for Indian consumer goods makers, whose margins have been pressured by the Russia-Ukraine war-led increase in commodity prices.
“We are witnessing early signs of stability in prices of a few commodities such as edible oils and packaging materials,” Nestle said in its statement.
The company’s shares rose 1.1% to Rs 19,601 in morning trading as the KitKat chocolate-maker also announced an interim dividend of Rs 120 per share.
($1 = 82.3550 Indian rupees)
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