Sharekhan's research report on Nestle India
Nestle India (Nestle) clocked resilient revenue growth of 16.4% led by a mix of consistent volume growth (~8%) and price hikes (8.5%) while raw material inflation of 15% resulted in a 369 bps decline in OPM to 20.7%; PAT decreased by 4% to Rs. 515.3 crore. Domestic volume growth stood at 6-9% in the past few quarters. Management expects volume growth momentum to sustain led by sustained innovation, better penetration of key brands in the rural market and foray into new categories. Raw material inflation will curb near-term margins. Better revenue mix, supply chain initiatives, operating efficiencies and stable raw material prices would help EBIDTA margins improve in the coming years. Stock trades at 61.2x and 52.2x its CY2023E and CY2024E earnings.
We maintain a Buy recommendation on the stock with a revised PT of Rs. 21,700.
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