Nestle India Ltd. share price target

We Maintain HOLD with unchanged TP of Rs. 18,600 as at CMP the risk-reward is unfavourable even as the long term growth trajectory appears fair (20+ projects in pipeline)

Staring at high inflation in multiple commodities | 14000 crore of sales. It is broadly present in infant & baby food products, noodles, chocolates & beverage categories. In the last five years, the company has forayed into newer categories and launched more than 100 new products. The company has nine manufacturing facilities, including the newly commissioned plant in Sanand, Gujarat. Its major brands include Maggi, Nescafe, KitKat, Cerelac among others...

categories, although 8% cost inflation and current commodity prices of coffee and cocoa can pressurize margins. NEST has reported a strong 13.6% sales growth in mega Cities, 13.7% in TC 2-6 and 9% in villages which shows the growth potential given low penetration. Prepared Dishes, Confectionary and Beverage growth 16.7%, 20.4% and 16.1% looks encouraging and we are confident of double digit growth in these categories. However, Milk products (42% of sales) has grown in single digits since 2014 and margin centric model in Dairy and high competition in both Dairy and Nutrition can be a drag....

While we like the longer term investment case for NEST, driven by its high topline growth potential, expensive valuations and commodity cost concerns lead us to maintain our Neutral rating....

Company's strong portfolio of brands and well-spread distribution network will improve product penetration and continue to support performance. Hence, we reiterate our BUY rating on the stock with a rolled forward target price of Rs. 22,150 based on 65x CY23E adj. EPS. Double-digit growth for key products aid topline Q3CY21 standalone revenue increased by 9.6% YoY to reach Rs. 3,883cr due to increased demand for various product segments, such as milk products and confectionary. Export sales registered slight upward trend at 1.3% YoY to reach Rs....

Margin came in at 24.42% versus 24.95% over the preceding three months amid rising commodity prices across oils and packaging materials. Nestle India approved a second interim dividend of Rs 110 per equity share of Rs 10 each for the...

Domestic revenue growth of 10% YoY as steady though unexciting – recovery in some categories (mainly out-of-home) appears to have been partly offset by reduced in-home consumption for select products. We see near-term (increased) challenges due to inflationary inputs while execution on growth pillars continues.

In a welcome new disclosure, the quarterly press release now has commentary on segmental growth, and growth for the quarter seems to be broad based across the four key segments. On a high EBITDA margin base, operating profit and PAT growth came in tepid at 5.9% and 3.2%, respectively, especially as material cost inflation led to the lowest gross margin in 17 quarters in 3QCY21. The press release indicated commodity costs pressures are likely to persist. Valuations at 60.8x CY23E EPS do not leave any room for any upside from a...

Nestle India (NEST) 3QCY21 result has been in-line with our estimates. Revenue continued double digit growth momentum on a high base of 10%YoY. Organised trade recorded strong recovery with revenue growth at mid-twenties after a muted second quarter due to COVID-induced-lockdowns. Revenue growth in both metros and small towns stood at high double digit. MAGGI Noodles and MAGGI MasalaaeMagic posted healthy growth while MAGGI Sauces reported muted growth due to decreased inhome consumption, high base and increased competitive intensity. Milk Products and Nutrition (toddler range and milk made), Confectionary (power brands; Kitkat, Munch,...

We thus lower our Revenue/EBITDA/PAT estimates for CY21-23E by 1-5%. Maintain HOLD with an unchanged TP of Rs. 18,600 and await better entry points.