Embassy REIT guides for lower leasing in FY25
Nestle India posted a net profit of ₹934.17 crore in the March quarter, up 27 per cent year-onyear, on the back of strong growth momentum across its product portfolio. Revenue from operations rose 9.05 per cent to ₹5,267.59 crore. The company announced that it has inked a definitive agreement with Dr. Reddy’s Laboratories to form a JV company in the nutraceuticals space.
The company’s board has recommended a final dividend for the (15 months) financial year ended March 31, of ₹8.50 per share amounting to ₹8,195.3 million.
SALES
The joint-venture company, which is expected to become operational in Q2 of FY25, will see Dr Reddy’s holding 51 per cent stake and Nestle India holding 49 per cent stake. Nestle India will have a “call option” to increase shareholding up to 60 per cent after six years , while Dr Reddy’s will continue to hold at least 40 per cent stake, the statement added.
Nestle India’s total sales and domestic sales grew by 9.3 per cent and 8.9 per cent, respectively, in the March quarter.
Suresh Narayanan, Chairman & Managing Director, Nestle India said, that the company delivered double-digit growth despite challenges posed by rising food inflation and volatile commodity prices. “We have witnessed a strong growth momentum across our product portfolio led by a combination of pricing and mix.
Our domestic sales crossed ₹5,000 crore this quarter,” he added.
Noting that prepared dishes and cooking aids portfolio saw strong growth, Narayanan added that “India emerged as the largest market worldwide for Maggi, in FY24.” Confectionery portfolio also delivered “strong performance”, making India the second-largest market for Kitkat globally, he added. The company’s beverage business recorded “robust growth” performance. “Nescafe has introduced its coee to over 30 million households in India in the last seven years,” Naryanan said. Meanwhile, by 2024-end,the company will begin selling its premium coee brand Nespresso’s product portfolio through its distribution network, online channels, and boutiques.
COMMODITY OUTLOOK
Nestle India said that the company is seeing “unprecedented headwinds in Coee and Cocoa with all time high prices and an ongoing price rally.” Cereals and grains are going through a structural cost increase backed by MSP.
Narayanan said the JV agreement will allow Nestle to bring its “science-backed nutritional solutions” to more consumers in the country leveraging Dr Reddy’s retail and distribution network. The partnership will “bring together” the global range of nutritional health solutions as well as vitamin, minerals, herbals and supplements of Nestlé Health Science (NHSc) with the “established commercial strengths” of Dr. Reddy’s in India, the company noted.
Embassy O¨ce Parks REIT has guided for 5.4 msf of gross leasing in FY25, despite exceeding its FY24 target by 35 per cent, indicating a flat growth in o¨ce leasing. It has however guided for a higher net operating income in the range ₹3,210-3,350 crore and higher distribution in the range ₹22.4-23.10 per unit, compared to ₹21.33 seen in FY24, which was down 2 per cent on year. The NOI, a key metric for REITs, rose 8 per cent on year to ₹2,982 crore in FY24 while revenue also rose 8 per cent to ₹3,685 crore.
The country’s first REIT leased 8.1 msf across 99 deals in FY24, exceeding its full year guidance of 6 msf. Over 65 per cent of the leases were to global capability centres. The leases were at 31 per cent leasing spreads of which 4.4 msf of new lease-ups had 28 per cent spreads and 1.3 msf of renewals were at 37 per cent spreads.
Four large deals accounted for 2.4 msf space and this included leading multinationals. It ended the year with occupancy of 85 per cent, a bit lower than the occupancy of 86 per cent achieved in FY23. Average monthly in-place rent also showed a growth to ₹87 per square feet from ₹80 psf a year ago.
RISE IN NOI
In the March quarter, the REIT reported a 13 per cent rise in
NOI while revenue rose a modest 9 per cent with 1.5 million square feet being leased led by financial services and co-working operators. It reported NOI of 765.6 crore on revenue of ₹945.8 crore in the quarter. Commercial o¨ce margins were at 84 per cent and hotel margins at over 50 per cent.
Distribution during the quarter at ₹5.22 per unit for a total of ₹494.8 crore fell 7 per cent on year primarily due to an increase in costs and other working capital changes. The REIT’s EBITDA in Q4 moved up 16 per cent to ₹758 crore with a margin up 500 basis points to 80 per cent. For the full year EBITDA margin was at 81 per cent compared to 79 per cent year ago.