Nestle India Ltd. share price target

Nestl India's net sales, EBITDA and net profit surged by 35% yoy, 67% yoy & 116% yoy to Rs23.5bn, Rs4.5bn & Rs2.7bn, respectively in 3QCY16. This growth is largely attributable to lower base effect due to ban on Maggi in the previous year, while growth excluding Maggi is likely to be in lower single digit. While we expect Nestl to see 14.9% & 17.8% CAGR in revenue and earnings through CY16-18E, the valuations at 41.7x CY18E earnings are prohibitive, in our view. As we believe that there are better opportunities in the FMCG space at inexpensive valuations, we maintain our REDUCE...

ICICI Securities Ltd | Retail Equity Research Net sales grew 35.1% YoY to | 2346.2 crore (I-direct estimate: | 2502.7 crore) on the back of a low base, impacted by the Maggi noodles issue in the corresponding quarter last year. Domestic sales increased 37.9% while exports increased 5.1%. The company has launched 25 new products in the last three months, which has also contributed to a recovery in sales post the Maggi noodles issue Operating margins improved 315 bps at 19.6% (I-direct estimate:...

Recuperating from Maggi Noodle Fiasco; Opportunity Beckons:Milk Products and Nutrition to grow at a CAGR of 3.1% over CY16E-18E - NIL enjoys a leadership position in Milk and Nutrition segment, the same contributing to around 45% of the company's revenue. Milk Products and Nutrition is expected to grow at a CAGR of 3.1% from CY16E-CY18E on the back of new product launches and the company's strong brand equity.

Nestle India Limited - NESTLEIND recently attended Nestle India’s analyst meet. The company is in a transitional phase of achieving its lost sales by launching new products and rejuvenating its existing portfolio. While it has managed to execute very well in a highly challenging environment marked by sluggish market conditions, most of the easy gains have already come through. Its growth path from here is rather challenging, but the consensus estimates paint an overly optimistic scenario. We continue to believe that chances of earnings downgrades remain high and maintain our Sell recommendation.

Valuation: Phillip Capital raise their target multiple to 40x our CY17 earnings, translating into a target price of Rs 5,900 (Rs 5450 earlier). Considering the significant downside, maintain Sell recommendation.

We attended the analyst meet of Nestl India (NIL) to get a perspective on the company's performance in the current challenging environment and measures to accelerate its growth as the economy revives. We understand from the meeting that NIL is aggressively focusing on reviving its volume growth that had stalled over the last few years owing to the company's focus on pricing-led growth while pursuing higher margins. Simultaneously, NIL has also stepped up on the innovation pipeline across its product portfolio as can be seen from slew of launches by the...

ICICI Securities Ltd | Retail Equity Research Nestl India (NIL) reported muted Q2CY16 results with net sales and earnings coming in lower than our estimates. Net sales increased 16.7% YoY to | 2256.1 crore (I-direct estimate: | 2676.8 crore). Domestic & export sales grew YoY by 17.5% & 7%, respectively. Maggi noodles has consolidated its market leadership position with 57% market share after its reintroduction in November 2015 EBITDA margin improved 47 bps to 19.7% (I-direct estimate: 19.5%)....

Its Management stated that Maggi has regained market leadership in instant noodles segment with market share of 57% after its reintroduction in November 2015, which is still far below the peak of ~80% market share it used to enjoy in instant noodles segment before the crisis. The Company has launched 25 new products during last two months to garner growth opportunities across categories including Greek yogurt brand Grekyo,...

ICICI Securities Ltd | Retail Equity Research Brushing aside overhang of a tumultuous CY15, Nestl India (NIL) began CY16 on a firm footing towards recovery as net sales declined...

While quarterly numbers can be volatile and Maggi sales are likely to have beaten estimates but it can now be ascertained that Maggi relaunch has been successful. Gross margins fell vs. Q1CY15/Q4CY15 due to rise in input prices...

Backed by enthusiastic response to re-launch of Maggi, Nestl India's 1QCY16 results were ahead of our expectations. While its net sales fell 8.4% to Rs23bn, EBITDA and net profit came in at Rs5.1bn and Rs2.6bn. Nestl India's domestic sales and export sales fell by 8.7% and 4.8% to Rs21.3bn and Rs1.7bn, respectively. We expected Nestl to post revenue and earnings CAGR of 19% and 16%, respectively through CY15-17E. However, at 38.4x CY17E earnings, as we believe that valuations are stretched at current levels, we revise our recommendation on the stock from...