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Nirmal Bang Report
There is no material change to our FY25E and FY26E EPS estimates:
The long-term narrative for revenue and earnings growth for Nestle India Ltd. is highly appealing. Companies such as Nestle India with a strong pedigree and distribution strength are expected to benefit significantly from the immense growth prospects of the Packaged Foods segment in India,
Further, the successful implementation of the company's volume-led growth strategy during a large part of Mr.Suresh Narayanan's tenure provides confidence in execution as well,
Significant distribution expansion along with an unprecedented level of capex (~Rs 75 billion during 2020-2025) also indicates the management's confidence about future growth prospects.
However, valuation at ~59 times FY26E earnings per share is expensive and does not offer any significant upside from a one-year perspective.
We value Nestle at 60 times FY26E EPS to arrive at our target price of Rs 2,550. We maintain our “Accumulate” stance on Nestle.
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