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

KR Choksey's research report on Nestle India

For Q4CY22, NEST’s revenue was INR 42,568 mn (+13.6% YoY/ -7.5% QoQ). For CY22, revenue grew by 14.6% YoY to INR 1,68,970 mn. The growth was broad based across categories. EBITDA for the quarter was INR 9,864 mn (+14.9% YoY/ -1.8% QoQ). EBITDA margin improved by 26 bps YoY/ 135 bps QoQ to 23.2%. For CY22, EBITDA grew by 4.9% YoY to INR 37,420 mn while EBITDA margin contracted by 206 bps YoY. PAT for Q4CY22 was INR 6,281 mn (+65.5% YoY/ -5.0% QoQ). Adj. PAT for the quarter was INR 6,415 mn (+4.1% YoY/ -3.0% QoQ). For CY22, PAT grew by 12.8% YoY to INR 23,905 mn while Adj. PAT grew by 2.7% YoY to INR 24,200 mn.

Outlook

We apply P/E of 61.7x on CY24E EPS of INR 353.2 (INR 357.5 earlier) and arrive at a target price of INR 21,805 per share (unchanged) with an upside potential of 14.8% from the CMP. Accordingly, we maintain our “ACCUMULATE” recommendation on the shares of Nestle India.