Nestle India Ltd. share price target

Commits to invest Rs 26bn in India over next 3-4 years We are upgrading NEST to HOLD from reduce given 1) resilient performance 2) growth visibility given Rs26bn investment program 3) sustained performance in key brands like Maggi, Kitkat, Munch, Nescafe 4) 80%...

Boosted by in-house demand, brands like Maggi Noodles & Sauces, Kit Kat, Munch, Nescafe Classic and Sunrise registered double-digit growth in Q3CY2020. Rising in-house consumption, sustained new launches and expansion in...

Nestle is well positioned to capture the immense growth opportunity given its market leadership, consumer loyalty and trust, lower penetration, healthy cash flow generation, growing demand for packaged / instant food given tailwinds from rising in-home consumption. We initiate coverage with BUY

Though the supply & demand conditions for most categories are normalising, prepared dishes segment is having a different tale. One of the clear trends in the last four months has been increasing demand for convenient food. Maggi Noodles, ketchup, Masala magic witnessed strong demand conditions in the June quarter. However, the company could not supply the products in April given most manufacturing facilities either remain closed or are working on very low utilisation. Though manufacturing operations returned to normal in June-July, demand is still outpacing...

production disruption across factories. Demand in Out Of Home channel was severely reduced. The OPM increased 76 bps to 24.51% and the operating profit up by 5% to Rs 747.56 crore. Other income fell 48% to Rs 37.93 crore in Q2FY'21 compared to Rs 72.59 crore in Q2FY'20 while interest cost was up by 27% to Rs 40.80 crore. Depreciation decreased by 2% to Rs 92.42...

28 July 2020 Nestl (NEST)s revenues for the quarter disappointed, weighed by ephemeral lockdown issues, which impacted manufacturing. We believe this would not pose much of a challenge going forward. EBITDA margins were in-line likely due to ad spend cuts, aligned with peers that have reported their results thus far. NEST remains among the best structural plays in the Indian Consumer and (b) the evident revival in topline and earnings momentum ahead of peers in recent years. Valuations are, however, rich at 67.2x CY21 EPS and 56.6x CY22 EPS. Maintain Domestic sales grew 2.6% YoY during the quarter, whereas export sales declined 9.3% YoY. particularly the cost of milk and its derivatives. Higher staff costs as a percentage of sales (+170bp YoY to 12.1%) and lower other expenses as a percentage of sales (-440bp YoY to 19.

We are cutting CY20-23 EPS estimates of Nestle by 3.2% to 4.2% on disappointing performance in 2Q20. Although Nestle posted positive sales growth of 2.6% despite setback in vending business, constraints in production and distribution limited gains in a very strong quarter for food essentials. We were also surprised at GM pressure given benign prices of...

from E-commerce went up significantly during the quarter thus benefitting the bigger brands in gaining...

CY19 was another year of double-digit sales and volume growth in Prepared Dishes (largely 2010, NEST has witnessed highest growth in the Chocolates and Confectionary segment in 2019 with over 15% volume/value growth along with market share gain for the first time in many years. With high category growth opportunity in foods and NESTs focus on volume led double-digit growth backed by new launches, prospects of top-line growth remain bright. The emphasis on volume growth focus is clearly becoming more Net sales stood at INR123.7b in CY19, growing 9.5% YoY. However, due to a sharp decline in export sales, royalty expense to net sales appear to have increased by EBITDA grew 5.7% YoY to INR28.9b in CY19. On 5-year basis, NESTs PAT CAGR looks relatively weak, primarily due to the Nevertheless, the close to double-digit PAT CAGR for 5 years is still a Capex for CY19 stood at INR1.6b with capex to sales up 10bp YoY to 1.3%.