Nestle India Ltd. share price target

We recommend a BUY rating on the stock with a near-term TP of Rs 21,700, implying an upside of 10% from the CMP

Highest domestic revenue growth in a decade, at 14.8% in CY22, led by both volumes and pricing

NEST is India’s leading FMCG company. It is a subsidiary of Nestlé S.A., a Swiss MNC which is the world's largest food & beverage company. India is among the fastest-growing markets for Nestlé SA. NEST has a presence across India with 8 manufacturing facilities and 4 branch offices.

For Q4CY22, NEST’s revenue was INR 42,568 mn (+13.6% YoY/ -7.5% QoQ). The YoY revenue growth rate slowed down vs. 16.1%/ 18.5% YoY in Q2CY22/ Q3CY22, respectively. The tonnage in domestic segment declined by 0.8% YoY in the quarter vs. a growth of 7.8%/ 7.0%/ 8.8% YoY in Q1CY22/ Q2CY22/ Q3CY22, respectively.

We estimate Revenue/EBITDA/PAT CAGR of 11%/14%/15% over CY22-25E based on the above thesis and we maintain our BUY rating on the stock with the unchanged TP of Rs 22,000/share. We value the company at 65x CY24 EPS. The TP implies an upside of 12% from the CMP.

Nestle India (NEST) continues to report mid to high teens (14-18%) revenue growth driven by broad based performance across all segments. Impact of price hike on LUPs (15-20% salience) is moderately concerning. However, early-signs of clawing back volume market share in the main-stream and premium segments is comforting.

CY22 revenue increased 14.5% YoY with broad-based growth across categories