Buy Nestle India, target of Rs 1800: IIFL

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IIFL has recommended a buy rating on Nestle India a one-year target price of Rs 1800 in its June 26, 2008 research report. "Nestlé is one of the best plays on the ongoing boom in India's processed-food industry, given its dominant presence in underpenetrated and high-growth categories such as infant and baby foods, noodles, ketchups and confectioneries. High raw-material prices notwithstanding, we expect Nestlé's earnings growth to accelerate on the back of increased pricing power and strong underlying volume growth, further aided by a decline in tax rates."

"We project an earnings CAGR of 24% over CY07-10ii. We initiate coverage with a Buy rating and a one-year target price of Rs 1800, based on a target multiple of 23x one-year forward earnings, in line with Nestlé's five-year average multiple," says IIFL's research report.

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