Nestle India Ltd. share price target

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...

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....

NIL has been able to grow at a consistent pace in the last four years. However, volume growth has moderated to 2.6% in CY20. We believe certain supply constraints during peak of the pandemic and relatively smaller presence in rural regions impacted growth last year. However, we believe the company is well placed to capture the growth now with increasing rural presence and capacity addition in existing categories. We believe NIL would be able to maintain dividend-payout of ~80%. The stock is trading at premium valuation multiples at 67x CY21E & 60x CY22E. We...

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...

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...

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...

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...

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...