Nestle India Ltd. share price target

Nestle India (NEST) 4QCY20 result was below our estimates. Domestic business continued double digit growth momentum however, revenue from export declined due to lower coffee exports. Key brands like Maggi noodles, Kitkat and Nescafe continued to record strong revenue growth. Business recovery for out-of-home-consumption products improved sequentially but continues to remain below pre-covid levels. Deflationary raw material environment supports gross margin expansion for 2 nd consecutive quarter. In 3QCY20 NEST guided to invest Rs 26bn for developing new factory in Gujarat. As on Dec'31 2020; total capex incurred stands at Rs 4.8bn. We...

disappointments in the Dec'20 quarter results of peers with high in-home consumption, NEST's 10.1% domestic sales growth was healthy. This means that barring the COVID-led lockdown affected earnings in the Jun'20 quarter, domestic sales growth has been healthy for the rest of CY20. While gross profit was in line, there was a miss at the EBITDA and PAT level, largely attributed to higher marketing costs in 4QCY20 (as per its press release). This is actually a positive going forward as it indicates the management's confidence in its growth prospects. NEST doesn't disclose...

Demand in Out of Home channels has improved sequentially. We are reducing CY21/22 EPS estimates by 4.6%/3.8% on the back of high employee cost witnessed during the quarter. Double digit growth in key brands like Maggi, Kitkat and Nescafe along with improvement in Out of Home...

Nestle India Analyst Meet highlighted its strategy to sustain double digit volume led growth led by focus on 1) Innovation and Renovation in existing segments 2) distribution expansion across channels. NEST achieved 6.2% volume growth in 3Q (8.2% and -0.3% in 1Q and 2Q) and 5% in 9mCY20 even as Rural growth is currently 2x urban growth at ~12%. NEST plans to invest behind emerging categories like breakfast cereals (Nesplus), Milo (MFD), Nescafe RTD and Nutraceuticals (Resource and Optifast) and3). We believe renewed thrust on Maggi (3Q growth at 19.1%) is...

The company's total sales and domestic sales both increased by 10.2% driven by volume and mix. Export sales increased by 9.4%. Demand in out of home channel improved through the quarter but continues to be impacted by COVID....

Nestle India (NEST) reported a perfectly in-line performance across key metrics for Q3CY20. Reported Revenue grew 10.2% YoY at Rs. 3,525cr in line with our estimate of Rs. 3,520cr. Domestic sales reported 10.2% driven by 7% volume and 3.2% price/mix led growth as per our estimates.

Nestl's Q3CY20 results beat our estimates on all counts with 10% volume and mix growth in the domestic market. In-house consumption brands witnessed double digit growth supported by improved supply situation. However, out of home categories continues to remain impacted due to pandemic fears. E-com business (4% contribution) witnessed strong acceleration with 97% growth. Exports increased 9.4% YoY. We have revised our CY20E, CY21E and CY22E EPS estimates at Rs 223...

Nestle India (NEST) 3QCY20 result was above our estimates. Revenue came back to strong double digit growth at 10%YoY (vs 2% in 2QCY20) driven by rise in at-home consumption. Out-of-home consumption also picks-up but remain below pre-covid levels. Operating profit margins improved led by deflationary raw material and cost rationalization. Positively, NEST has turned aggressive as the management guides for Rs 26bn capex (equivalent to total capex done over last 8-9 years). We have marginally trimmed our estimates downwards adjusting for lower yield on other income and higher depreciation due to accelerated capex. We value the company at 55x CY22E EPS. Our...