Accumulate Nestle India; target of Rs 19,982: KR Choksey

KR Choksey's research report on Nestle India

For Q4CY21, Nestle India reported revenue of INR 37,393 Mn, up 8.9% YoY (-3.7% QoQ). Domestic sales grew by 9.2% YoY (-3.5% QoQ) to INR 35,578 Mn and export sales were lower by 6.3% YoY (-14.3% QoQ) to INR 1,464 Mn. For the full year CY21, revenue stood at INR 1,47,094 Mn, a growth of 10.2% YoY, with domestic sales growing at 10.7% YoY while exports sales declined by 1.2% YoY. EBITDA for Q4CY21 stood at INR 8,657 Mn, an increase of 11.4% YoY (-8.7% QoQ) with margins at 23.2% (+51 bps/-127 bps YoY/QoQ). For the full year, EBITDA stood at INR 35,915 Mn with margins at 24.4%, an improvement of 44 bps. Net Profit decreased by 20% YoY / -37.4% QoQ to INR 3,867 Mn, with NPM of 10.3% (-374 bps YoY/-556 bps QoQ). The board has declared final dividend of INR 65 per equity share (FV of INR 10 per share) amounting to INR 6,267Mn.

Outlook

We apply P/E of 58.3x on CY24E EPS of INR 342.7 and arrive at revised target price of INR 19,982 per share (earlier TP of INR 21,150) with an upside potential of 11.0% from the CMP. Accordingly, we maintain “ACCUMULATE” recommendation on the shares of Nestle India.