Nestle India Reports Declining ROCE and Liquidity Challenges in Q2 FY24-25

Nestle India has recently undergone an adjustment in evaluation, reflecting the company's current market dynamics and operational metrics. The FMCG giant's financial landscape for the second quarter of FY24-25 has shown notable characteristics, including a Return on Capital Employed (ROCE) that has reached a low point of 100.39%. Additionally, the company's cash and cash equivalents have decreased to Rs 140.54 crore, indicating shifts in liquidity management.
The Debtors Turnover Ratio has also been reported at 57.85 times, suggesting potential challenges in asset management efficiency. While the Return on Equity (ROE) remains relatively strong at 79.6, the overall valuation metrics indicate that the stock may be perceived as expensive, particularly with a Price to Book Value ratio of 53.6.

Nestle India's performance over the past year has resulted in a return of -12.99%, which is below the performance of the BSE 500 index. The company continues to maintain a low Debt to Equity ratio of 0.01 times, alongside robust institutional holdings at 21.43%. With a market capitalization of Rs 2,15,475 crore, Nestle India continues to play a significant role in the FMCG sector, contributing 5.64% to industry sales.

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