Accumulate Nestle India; target of Rs 2721: KR Choksey

KR Choksey's research report on Nestle India

NEST’s overall performance for Q5FY24 was in-line with our estimates. While sales were marginally lower by 0.9%, EBITDA and Adj. PAT performance was as per expectations. The Board of Directors recommended a Final Dividend of INR 8.5/- per equity shares of INR 1/- each for the fifteen months FY ended 31st March 2024. NEST announced 2 new businesses- i) a JV with Dr. Reddy’s to bring innovative nutraceutical brands to consumers in India, and ii) to sell Nespresso coffee machines and capsules in India. We have now revised our model to reflect estimates for FY ending March instead of CY ending December.

Outlook

We believe growth rates will remain in the high single-digit range in the near term. We apply P/E of ~65x to FY26E EPS of INR 41.8 and arrive at a target price of INR 2,721 per share (unchanged) and maintain our “ACCUMULATE” rating.