Accumulate Nestle India; target of Rs 21,805: KR Choksey

KR Choksey's research report on Nestle India

CY22 was an extraordinary year and saw several adversities such as the Omicron variant of coronavirus, impending climate concerns, the global geopolitical developments, such as the Russia-Ukraine war. Despite the macroeconomic volatility, high inflation and rise in cost to consumers, Nestlé India (NEST) steered through challenges and sustained its growth platforms. NEST navigated through the challenges and delivered growth driven by strategies of scale, efficiencies, mix and pricing. NEST delivered the highest double-digit YoY growth in a decade, which was led by sustained volume and mix-led growth. Total Sales and Domestic Sales for CY22 grew by 14.5% and 14.8% YoY, respectively. Domestic Sales growth was broad-based with a healthy balance of pricing and volume. Export Sales grew by 8.2% YoY. NEST’s robust performance in e-commerce continued, fueled by Quick Commerce and Click & Mortar. Out-of-Home (OOH) business made a comeback and recovered its pre-COVID base. The robust growth in OOH was delivered by revamping, and resetting geography, channel and sales priority.

Outlook

We continue to apply P/E of 61.7x on CY24E EPS of INR 353.2 and maintain our target price of INR 21,805 per share (unchanged) with an upside potential of 15.1% from the CMP. Accordingly, we maintain an “ACCUMULATE” recommendation on the shares of Nestle India.