Motilal Oswal has given Neutral recommendation for Nestle India with a target price of Rs. 18,300 in its research report issued on Apr 21, 2021
Motilal Oswal’s research report on Nestle India
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 double-digits (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.
Valuations at 59x CY22E EPS are expensive and offer limited upside from a one-year perspective. We value the company at 60x Mar’23E EPS to arrive at our TP of INR18,300 per share. Maintain Neutral.