Nestle India Ltd. share price target

Company's strong portfolio of brands and well-spread distribution network will improve product penetration and continue to support performance. Hence, we reiterate our BUY rating on the stock with a rolled forward target price of Rs. 22,150 based on 65x CY23E adj. EPS. Double-digit growth for key products aid topline Q3CY21 standalone revenue increased by 9.6% YoY to reach Rs. 3,883cr due to increased demand for various product segments, such as milk products and confectionary. Export sales registered slight upward trend at 1.3% YoY to reach Rs....

Margin came in at 24.42% versus 24.95% over the preceding three months amid rising commodity prices across oils and packaging materials. Nestle India approved a second interim dividend of Rs 110 per equity share of Rs 10 each for the...

Domestic revenue growth of 10% YoY as steady though unexciting – recovery in some categories (mainly out-of-home) appears to have been partly offset by reduced in-home consumption for select products. We see near-term (increased) challenges due to inflationary inputs while execution on growth pillars continues.

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.

Nestle India (NEST) 3QCY21 result has been in-line with our estimates. Revenue continued double digit growth momentum on a high base of 10%YoY. Organised trade recorded strong recovery with revenue growth at mid-twenties after a muted second quarter due to COVID-induced-lockdowns. Revenue growth in both metros and small towns stood at high double digit. MAGGI Noodles and MAGGI MasalaaeMagic posted healthy growth while MAGGI Sauces reported muted growth due to decreased inhome consumption, high base and increased competitive intensity. Milk Products and Nutrition (toddler range and milk made), Confectionary (power brands; Kitkat, Munch,...

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...

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...

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...

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.