Nestle India Q2 Results Review - Sees Subdued Earnings In The Very Near-Term: Yes Securities

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Yes Securities Report.Nestle India Ltd. continued to report weak set of numbers for the second consecutive quarter versus expectations. Domestic sales grew just 1.2% due to muted consumer demand. We believe underperformance in Maggi (ex-Masala-Ae-Magic), Milk and Milk Nutrition (ex-Milkmaid) and Munch, among the bigger portfolio, impacted domestic sales in Q2. Going forward, while the sector is expected to gain from improving rural growth, Nestle with rural mix of 20-25% remains at the lower end among its peers. Hence, rural recovery led volume push will be lower for Nestle. Gross margins remained under pressure with 100 bps QoQ contraction largely led by high commodity prices especially for coffee and cocoa. Higher other overheads (+210 bps YoY) driven by increase in advertising and marketing investments, meant that Ebitda margin was down 150 bps YoY (~160 bps below our estimate). Key commodity inflation plus volatility will continue to put pressure on profitability in the near-term. Over next two-years, we are now building ~9% EPS CAGR (on a normalized FY24) led by ~8.7% revenue CAGR. The stock currently trades at ~72 times /62 times/56 times FY25E/FY26E/FY27E EPS. We assign multiple of ~60 times and roll-forward to FY’27E EPS, arriving at a revised target price of Rs 2,550 (Rs 2,515 earlier). Maintain Neutral rating..Click on the attachment to read the full report:.Nestle India Q2 Results Review - Sluggish Revenue Growth Lingers: Dolat Capital.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Nestle India Q2 Results Review - Sees Subdued Earnings In The Very Near-Term: Yes Securities

The brokerage believes underperformance in Maggi, Milk and Milk Nutrition (excluding Milkmaid) and Munch, among the bigger portfolio, impacted domestic sales in Q2.

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Nestle India Q2 Results Review - Sees Subdued Earnings In The Very Near-Term: Yes Securities

The brokerage believes underperformance in Maggi, Milk and Milk Nutrition (excluding Milkmaid) and Munch, among the bigger portfolio, impacted domestic sales in Q2.

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