Buy Nestle India; target of Rs 8001: KR Choksey

KR Choksey's research report on Nestle India

Nestle India ltd declared its Q3CY16 results its Net Sales stood at INR 23634.9 Mn which was up by 35.65% y-o-y and by 4.04% q-o-q. EBIDTA stood at INR 4751.5 Mn which was up by 65.02% y-o-y and by 1.43% q-o-q and EBIDTA margin stood at 20.1%. PAT was at INR 2693.8 Mn which was up by 116.9% y-o-y and by 16.7% q-o-q. PAT Margin remained at 11.4%.

Nestle India Ltd growth continuous with new innovative products across category and gaining markets share for Maggi indicates its consumers’ confidence in its products. With leadership in category like Noodles & Dairy whiteners Management remained positive for the growth for the company and going a head the focus would be to gain optimistic performance by gearing up the volumes in its business segment and keep launching innovative products across segment. We expect revenue growth of 25% in CY16E & around 8-10% in CY17E. The stock is currently trading at an EPS of 190.5 its CY17E with a PE of 36.4 its FY17E. We recommend a ‘BUY’ rating on the stock with a target price of INR 8001, giving an upside potential of 15.2%.