Prabhudas Lilladher's research report on Nestle India
NEST displayed a weak quarter of low-single digit topline amid lower consumption growth, harsh climate, continued food inflation & volatile commodity prices. NEST continues to report growth across segments, markets (Metros, T1-6 cities & rural markets) and channels (MT, OOH and Ecommerce). Long term drivers remain intact, led by 1) sustained expansion in rural reach (~20-25% of sales) 2) healthy innovation pipeline 3) huge scope of growth in coffee, RTD & Chocolates and 4) higher growth in channels like E-Com and MT and 5) strong traction in Pet care segment.
Outlook
We increase our target price to Rs. 2746 (Rs. 2695 earlier) by rollover and value the stock based on DCF. NEST share prices have been consolidating over the past 6 months, we expect back ended returns given near term pressures; retain ‘Accumulate’ for LT gains.
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