Nestle India Ltd. share price target

Nestle India (NEST) reported a perfectly in-line performance across key metrics for Q3CY20. Reported Revenue grew 10.2% YoY at Rs. 3,525cr in line with our estimate of Rs. 3,520cr. Domestic sales reported 10.2% driven by 7% volume and 3.2% price/mix led growth as per our estimates.

Nestl's Q3CY20 results beat our estimates on all counts with 10% volume and mix growth in the domestic market. In-house consumption brands witnessed double digit growth supported by improved supply situation. However, out of home categories continues to remain impacted due to pandemic fears. E-com business (4% contribution) witnessed strong acceleration with 97% growth. Exports increased 9.4% YoY. We have revised our CY20E, CY21E and CY22E EPS estimates at Rs 223...

Nestle India (NEST) 3QCY20 result was above our estimates. Revenue came back to strong double digit growth at 10%YoY (vs 2% in 2QCY20) driven by rise in at-home consumption. Out-of-home consumption also picks-up but remain below pre-covid levels. Operating profit margins improved led by deflationary raw material and cost rationalization. Positively, NEST has turned aggressive as the management guides for Rs 26bn capex (equivalent to total capex done over last 8-9 years). We have marginally trimmed our estimates downwards adjusting for lower yield on other income and higher depreciation due to accelerated capex. We value the company at 55x CY22E EPS. Our...

Commits to invest Rs 26bn in India over next 3-4 years We are upgrading NEST to HOLD from reduce given 1) resilient performance 2) growth visibility given Rs26bn investment program 3) sustained performance in key brands like Maggi, Kitkat, Munch, Nescafe 4) 80%...

Boosted by in-house demand, brands like Maggi Noodles & Sauces, Kit Kat, Munch, Nescafe Classic and Sunrise registered double-digit growth in Q3CY2020. Rising in-house consumption, sustained new launches and expansion in...

Nestle is well positioned to capture the immense growth opportunity given its market leadership, consumer loyalty and trust, lower penetration, healthy cash flow generation, growing demand for packaged / instant food given tailwinds from rising in-home consumption. We initiate coverage with BUY

Though the supply & demand conditions for most categories are normalising, prepared dishes segment is having a different tale. One of the clear trends in the last four months has been increasing demand for convenient food. Maggi Noodles, ketchup, Masala magic witnessed strong demand conditions in the June quarter. However, the company could not supply the products in April given most manufacturing facilities either remain closed or are working on very low utilisation. Though manufacturing operations returned to normal in June-July, demand is still outpacing...

production disruption across factories. Demand in Out Of Home channel was severely reduced. The OPM increased 76 bps to 24.51% and the operating profit up by 5% to Rs 747.56 crore. Other income fell 48% to Rs 37.93 crore in Q2FY'21 compared to Rs 72.59 crore in Q2FY'20 while interest cost was up by 27% to Rs 40.80 crore. Depreciation decreased by 2% to Rs 92.42...