Nestle India advanced on Thursday, being one of the few major stocks to have bucked the ongoing market slide.
The stock of the MNC food products company was up by 0.24% at Rs 533.95 on the BSE in early-afternoon trades. However, volumes on the counter remained thin, with just 1,200 shares changing hands.
Meanwhile, the 30-share BSE Sensex was down by 16.68 points at 3,093.40, largely on fears of a imminent US-Iraq war.
In the last 3 months, the Nestle India stock moved in the Rs 515-550 band. The stock, though it has not recorded big upward movement, has survived the market crash. A sharp setback was witnessed on the bourses especially after the presentation of the Union Budget for 2003-04, primarily on account of war jitters. The Sensex has lost 190.26 points, or 5.7%, in just few sessions - from its close of 3,283.66 on 28 February 2003 to the current 3,093.40. During the period, the Nestle India stock has edged down slightly by 0.19% to the current Rs 533.95 from Rs 535 on 28 February 2003, thus outperforming the market.
The stock has been able to hold ground primarily on account of the company's strong financial performance and the parent's plans to raise its holding in the Indian affiliate further. At the current Rs 533.95, the stock discounts its FY 2002 (full year ended December 2002) earning per share of Rs 25 by a price to earnings multiple of 21.2
Last Friday (on 7 March 2003), Nestle India reported strong Q4 results (the company follows calendar year as its accounting year).
For Q4 ended December 2002, Nestle India registered a 4% growth in net profit to Rs 37.67 crore on a top line growth of 3% to Rs 482.71 crore (Rs 4.82 billion). It was the huge extra-ordinary expenditure of Rs 15.26 crore that cause the net profit to rise only by 4%. However, the operational results were quite strong and at the profit before tax and extra-ordinary items level, Nestle India reported a hefty 48% growth in profit to Rs 71.72 crore. Domestic sales during the quarter stood at Rs 435 crore (Rs 4.35 billion), an increase of 8.7%. Export sales were lower by 17.6% at Rs 47.62 crore in value terms.
For the year ended December 2002, the company has posted a 19% growth in net profit to Rs 206.91 crore (Rs 2.06 billion) on a top line growth of 7% to Rs 2,047.7 crore (Rs 20.47 billion). Higher extraordinary expenses and higher tax provision trimmed the bottom line to some extent. At the PBT level, the company registered a 34% growth in profit to Rs 371.46 crore (Rs 3.71 billion).
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