Nestle India Ltd. share price target

NEST delivered an in line set of 1QCY21 numbers, with overall sales growth of 8.6% (v/s our estimate of 8.5%) and domestic sales increasing in doubledigits (10.2%). While gross margin was in line, EBITDA and PAT were 5.2% and 3% ahead of our estimates, respectively. The management did call out sequential inflation in commodity costs, which may affect operating margin ahead. While longer term opportunities are attractive, valuations of 59x CY22E EPS are expensive. We maintain our Neutral rating....

Nestl posted a strong set of numbers backed by double digit growth across key brands and improving Out of home demand. Fresh set of Lockdowns across the nation on account of increased Covid cases will increase pantry...

Moderating in-home consumption should benefit key segments while complete revival of Out-of-home consumption is expected to propel topline further in the near term. Hence, we upgrade our rating on the...

Continued thrust on new category, product launches The company continued its thrust on new launches & foray in subcategories. New launches are contributing 3-4% of total sales. Moreover, ecom channels' contribution has more than doubled in CY20 at 3.7% to total sales. NIL has been aggressive in terms of new launches in the last five years with introduction of more than 70 new products, variants. It forayed into breakfast cereals poha, upma in last two years that have grown faster in CY20. It has also been raising its marketing spend to support these brands. With higher consumption in rural areas, smaller towns, it is increasing its rural penetration by introducing smaller SKUs across segments. We...

Nestle India (NEST) 4QCY20 result was below our estimates. Domestic business continued double digit growth momentum however, revenue from export declined due to lower coffee exports. Key brands like Maggi noodles, Kitkat and Nescafe continued to record strong revenue growth. Business recovery for out-of-home-consumption products improved sequentially but continues to remain below pre-covid levels. Deflationary raw material environment supports gross margin expansion for 2 nd consecutive quarter. In 3QCY20 NEST guided to invest Rs 26bn for developing new factory in Gujarat. As on Dec'31 2020; total capex incurred stands at Rs 4.8bn. We...

Demand in Out of Home channels has improved sequentially. We are reducing CY21/22 EPS estimates by 4.6%/3.8% on the back of high employee cost witnessed during the quarter. Double digit growth in key brands like Maggi, Kitkat and Nescafe along with improvement in Out of Home...

disappointments in the Dec'20 quarter results of peers with high in-home consumption, NEST's 10.1% domestic sales growth was healthy. This means that barring the COVID-led lockdown affected earnings in the Jun'20 quarter, domestic sales growth has been healthy for the rest of CY20. While gross profit was in line, there was a miss at the EBITDA and PAT level, largely attributed to higher marketing costs in 4QCY20 (as per its press release). This is actually a positive going forward as it indicates the management's confidence in its growth prospects. NEST doesn't disclose...

Nestle India Analyst Meet highlighted its strategy to sustain double digit volume led growth led by focus on 1) Innovation and Renovation in existing segments 2) distribution expansion across channels. NEST achieved 6.2% volume growth in 3Q (8.2% and -0.3% in 1Q and 2Q) and 5% in 9mCY20 even as Rural growth is currently 2x urban growth at ~12%. NEST plans to invest behind emerging categories like breakfast cereals (Nesplus), Milo (MFD), Nescafe RTD and Nutraceuticals (Resource and Optifast) and3). We believe renewed thrust on Maggi (3Q growth at 19.1%) is...

The company's total sales and domestic sales both increased by 10.2% driven by volume and mix. Export sales increased by 9.4%. Demand in out of home channel improved through the quarter but continues to be impacted by COVID....