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Nirmal Bang Report
Nestle India Ltd.’s Q4 FY24 results were weaker than expectations on the sales front despite a relatively weaker base compared to preceding quarters. Even the domestic sales growth of 8.9% was led by price and mix as per the press release and not volumes. The management attributed this to a challenging environment.
Ebitda and profit after tax were nevertheless in line as gross margins and Ebitda margins surprised positively.
We remain constructive about the packaged food growth opportunity in India and Nestle (along with Britannia Industries Ltd.) has been at the forefront in driving growth for the past decade. Return on capital employed are also the best-of-breed.
Nevertheless, expensive valuation of ~70 times FY25E earnings per share and ~61 times FY26E EPS lead us to maintain 'Accumulate' rating on the stock.
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