Nestle India Ltd. share price target

We maintain our Hold rating on Nestle with an upward revised target price of Rs 9,843 (earlier Rs 8,008). Domestic sales registered 11% YoY growth in Q1CY18 led by volume growth supported by increasing penetration and rebuild of Maggi noodles. Gross margins expanded 300bps YoY led by lower commodity prices (milk and milk solids). EBITDA grew 35% YoY driven by lower overhead costs. PAT grew 38% YoY aided by 35% YoY rise in other income. Company's venture into breakfast cereals segment with significant headroom for growth current market size at ~$360mn and expected to grow at a CAGR of 16% over the next 5 years augurs well. Softer input prices and cost efficiencies are expected to drive margin expansion and strong earnings growth...

Thrust on Volume to Drive Growth Further: Nestle India's Revenue grew by 10.6% YoY, led by volume growth and increased product penetration. EBITDA margin expansion of 449bps was favorably impacted by lower commodity prices, particularly milk and milk solids and a considerable reduction in employee cost.

Revenue grew by 5.68% to Rs. 2736.84 Cr in Q1CY18 when compared to the previous quarter. Nestle India Ltd Q1CY18 results Comment

Sales for the quarter were up 6.4% YoY to | 2757.2 crore (I-direct estimate: | 2854.8 crore) led by 6.3% domestic sales growth. However, on a comparable basis, domestic sales saw growth of 13.4% mainly on the back of volume growth across segments as NIL launched many variants in the last one year in this segment Operating profit increased 34% to | 704.9 crore (I direct estimate: | 633.7 crore) while margins witnessed an improvement of 531 bps to 25.6% mainly on the back of lower material costs,...

Sales growth remains subdued: Net sales rose 10.5% YoY to INR27.4b (est. of INR27.7b). Adjusted for GST accounting, sales growth was 13.4%, according to NEST's press release. Growth momentum witnessed in 4QCY17 (15.6%...

Nestle reported a robust quarter with EBITDA and net profit growth of 35% and 40%, respectively, which was ahead of our expectations by 7%. Comparable sales grew by 13% to Rs27.5bn, in line with expectations. However, operating margin witnessed strong improvement of 440bps, led by lower input costs and cost savings....

Nestle India's recovery is gaining momentum, with recent growth outperforming peers, driven by new CEO's strategy to focus on volume-led growth, drive a faster pace of innovation and expand distribution. With a revitalised core portfolio and increased focus on growth, we believe that Nestle's...

Increased Earnings Visibility Warrants a Rating Upgrade Nestle India has posted an impressive set of numbers for 4QCY17. Its reported net sales grew by 15.6% YoY to Rs25.9bn with domestic business growing by 15.8% YoY and exports by 12.7% YoY. EBITDA surged by 28.3% YoY to Rs6.1bn, aided by lower input cost and other cost-rationalisation measures. While reported net profit increased by 60% YoY to Rs3.1bn, adjusted net profit excluding provisioning for contingencies grew by 37.6% YoY to Rs3.9bn. We expect Nestle to report revenue and earnings CAGR of 13.9% and 16.8%, respectively through CY17-19E. Based on expected adjusted EPS of Rs191, the stock currently trades at 39.7x CY19E...

Sales for the quarter were up 10.9% YoY to | 2589.6 crore (Idirect estimate: | 2717.2 crore) led by 10.8% domestic sales growth. However, on a comparable basis, domestic sales witnessed growth of 18.1% mainly on the back of volume growth...

Reported net sales increased 15.6% YoY to INR25.9b in 4QCY17. The company's press release states that domestic comparable sales growth adjusted for GST was 18.1% YoY. Exports grew 12.7% YoY to INR1.9b.Gross margin expanded 160bp YoY to 58.7%. Other expenses were down sharply by 240bp YoY. Staff costs too fell 10bp YoY to 10.1%. EBITDA margin,thus, expanded 410bp YoY to 24.4% in 4QCY17. EBITDA grew 38.7% YoY toINR6.3b (est. of INR5.3b). PAT rose 50.2% YoY to INR4.2b (est. of INR3.3b).CY17 highlights: Net sales were up 9.7% YoY to INR99.5b. EBITDA margin expanded marginally by 10bp YoY to 21.7%. EBITDA grew 10.1% YoY toINR21.6b. PAT rose 13.2% YoY to INR13.5b