Sharekhan has given Buy recommendation for Nestle India with a target price of Rs. 19,055 in its research report issued on Apr 20, 2021

Sharekhan’s research report on Nestle India

Nestle India’s Q1CY2021 performance was largely in-line with expectation with revenue growth of 9% to Rs. 3,610 crore and OPM expansion of 189 bps to 25.8%; PAT grew by 14.6% y-o-y to Rs. 602.6 crore. Domestic business maintained its double-digit growth momentum with 10.2% growth (driven by volume and mix growth of 10.7%). All key categories registered double-digit growth with improvement in out-of-home categories. We need to keenly monitor the impact of localised lockdown on sales in the coming months. Medium-term thrust remains on achieving double-digit revenue growth by penetrating deep into rural markets (covered 89,288 villages), innovation (that contributes 4.3% to sales), and accelerating footprint through new channels. We have broadly maintained our earnings estimates for CY2021 and CY2022.

Outlook

The stock has corrected by 10% from its high and is currently trading at 55.7x its CY2023E EPS. We maintain our Buy recommendation with an unchanged PT of Rs. 19,055.

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