Nestle India Ltd. share price target

On account of the limited upside from the current market price, we reiterate our rating on the stock as HOLD, with a revised target price of Rs. 17,460 based on 62x CY21E adj. EPS. Domestic sales drives performance Nestle India Limited registered a revenue growth of 10.7% YoY in Q1CY20 to reach Rs. 3,325cr (vs. Rs. 3,003cr in Q1FY19). This growth was largely supported by increase in Domestic sales (10.7% YoY) driven by volume and mix, and improved Export sales (12.9% YoY) on account of lower base. Brands like Maggi, KitKat, Nestle Munch helped...

Nestle India Limited is an India-based company engaged in food business. Nestl is the world's leading Nutrition, Health and Wellness Company. The Company was founded in 1866. The food business incorporates product groups through milk products and nutrition, beverages, prepared dishes and cooking aids, chocolates and confectionery. The Company's brands include NESCAFE, MAGGI, MILKYBAR, KIT KAT, BAR-ONE, MILKMAID,...

Manufacturing disruption to hit revenue in Q2CY20 Though the company is witnessing higher demand for Maggi (entire prepared dishes segment), manufacturing has still been disrupted in some of its plants. Our channel check suggests usual sales during April as the company was able to supply with existing inventories & usual manufacturing from some of its plants (Moga, Punjab & Goa plants are working at full capacity). However, noodles & coffee supplies are getting depleted in May 2020 with some plants working on reduced capacity mainly due to labour...

Gross margins pressure to abate given sharp decline in commodities Nestle has sustained strong sales momentum given strong show by Maggi and Chocolates and also pantry stocking in key categories. Our channel checks suggest sustained growth in 2Q21 also given that lockdown is forcing consumers to undertake pantry stocking in Maggi, tetrapack Milk, Coffee and Dairy whitener in particular. Our sales mix analysis suggested that Nestle is...

12 May 2020 Nestle Indias (NEST) 1QCY20 double-digit domestic sales growth in the current environment (due to the COVID-19 crisis) is impressive. While higher milk and milk derivative costs have led to margin compression, long- term earnings prospects remain robust. Valuations of 67x CY21E EPS and 56.5x CY22E EPS fully factor in the upside from a 1-year perspective. Domestic sales grew 10.7% during the quarter, largely driven by volume and mix. EBITDA grew 4.7% YoY to INR8b (v/s est. INR7.8b), PBT was flat YoY at INR7.

Net sales jumped 8.8% year-on-year (Y-o-Y) to Rs 3,149.29 crore in Q4 FY20. In Q4 FY19, total sales increased 8.8%. Domestic sales increased 10% through a combination of volume & mix. Export sales have dropped 9. 7% due to lower exports of coffee to Turkey. Profit before tax surged 17.7% to Rs 614.62 crore Y-o-Y. Current tax expenses slumped 21.8% to Rs 144.41 crore during the period under review. Profit after tax surged 38.41% to Rs 473.02 crore Y-o-Y....

Higher brand investments towards new launches aiding growth Nestl India (NIL) has been able to deliver 8-12% volume growth (as per our estimates) in the domestic business over last seven quarters backed by aggressive new launches. NIL has increased marketing spend by ~20% over last one year to support new launches. Contribution to sales from new launches has grown from 1.5% to 3.7% over last three years. During the quarter, NIL continued its innovations in market across categories with the launch of KitKat Dessert Delight Rich Chocolate Fudge, MAGGI Fusian Range...

We cut our CY20 and CY21 EPS by 5.4% and 4.7% and maintain Reduce rating on Nestle given that it represents a classic confluence of life time high PE multiples and EBIDTA margins in a scenario of rising input costs with an estimated 10% PAT CAGR over CY19-21. Although NESTLE has been able to report a strong 10% domestic sales growth in a tepid demand scenario, it has...

13 February 2020 Double-digit domestic sales growth, while lower than forecast, is very healthy in the current environment. Higher milk & milk derivative costs are likely to weigh on near-term earnings growth, but longer-term prospects remain robust. Valuations of 58.1x/48.6x CY21/22E EPS fully factor in upside from one- year perspective. Domestic sales grew 10% YoY, largely driven by volume/mix. Export sales declined 9.7% YoY due to lower coffee exports to Turkey. Gross margin shrank 220bp YoY to 56.8% due to higher commodity cost, particularly milk and its derivatives. Higher staff costs (+60bp YoY to 10.2%) and lower other expenses (-290bp YoY to 25.2%) led to EBITDA margin expansion of 20bp YoY to 21.

Domestic sales keep the growth momentum going Q3CY19 standalone revenue increased by 9.4% YoY to Rs. 3,216cr, primarily led by domestic sales (+10.5% YoY to Rs. 3,039cr) driven by better volumes and mix. This is partially offset by weaker export sales (-7.1% YoY to Rs. 160cr) owing to lower coffee exports to Turkey. EBITDA grew 3.6% YoY to Rs. 756cr, despite contraction in EBITDA margin (-130bps YoY to 23.5%) due to higher raw material prices, particularly milk and its derivatives. PAT rose 33.5% YoY to Rs. 595cr, helped by lower depreciation (16.1% YoY to Rs. 78cr) and taxes (-53.7% to Rs. 104cr) under the new tax regime. Reintroduction of Milo helps regain a slice of MFD segment pie...