Nestle India Ltd. share price target

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...

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.

Nestl sustained double digit growth as all categories except Maggi posted double digit sales growth led by strong consumer traction and gradual opening up of the economy. NEST continues to gain across channels with MT growing in mid-twenties while E-Com is sustaining faster growth. NEST's has increased focus on rural growth by increasing village coverage by 33% through relevant/ rural centric products which will accelerate growth as rural and semi-urban markets are growing at 2-2.5x of urban and are contributing...

Company's strong portfolio of brands and well-spread distribution network should improve product penetration and continue to support performance. Hence, we reiterate our BUY rating on the stock with a revised TP of Rs. 19,720 based on 67x CY22E adj. EPS. Topline growth momentum continues Nestle India's Q2CY21 standalone revenue increased by 14.0% YoY to Rs. 3,477cr mainly due to continued momentum in domestic sales and also due to weaker base in Q2CY20. Export sales grew 17.7% YoY (remained flat QoQ) to Rs. 157cr. Strong...

However, in light of emerging RM headwinds (packaging material and edible oil) and to bake in muted Q2 we cut our EBITDA/PAT estimates for CY21E/22E by 9%/11% and 11%/12% respectively and introduce CY23E. Maintain HOLD with unchanged TP of Rs. 18,600 as we roll forward our multiple to CY23E EPS.

For the quarter ending June 2021, Net sales (including other operating income) of Nestle India has increased 13.97% to Rs 3,476.70 crore compared to quarter ending June 2020. Operating profit margin has slumped from 24.51% to 24.39%, leading to 13.44% rise in operating profit to Rs 848.00 crore. Raw material cost as a % of total sales (net of stock...

Capex on track; rural reach to get enhanced of sales. It is broadly present in infant & baby food products, noodles, chocolates & beverages categories. In the last five years, it has forayed into newer categories &...

We initiate coverage on Nestle with a BUY for a price target of Rs 20,944 (65.8x CY23 earnings) over the next 18-24 months representing a potential upside of 24.2% on the CMP of Rs 16,867. We have used the DCF method to value Nestle.

Nestle India (NEST) 1QCY21 reported in-line result driven by strong double digit growth momentum in domestic business (3rd consecutive quarter) while revenue from exports continues to decline. Key brands like Maggi noodles, Kitkat, Nescafe classic, Maggi Sauce, Milkmaid, Maggi Masala Magic grew by double digits during the quarter driven by higher in-home consumption. Revenue from e-commerce grew 66%YoY. Gross margin expanded for 3rd consecutive quarter however, management highlights inflation in the cost of raw material to be key challenge going forward. Dividend announcement of Rs 25/share is positive. We have marginally trimmed our other income estimates for...

However, in light of emerging RM headwinds (packaging material and commodities like palm oil), we tweak our estimates a shade resulting in a downgrade to HOLD from BUY earlier. However, we maintain a TP of Rs 18,600 as we continue to value the stock at 60x its CY22E EPS.