Hold Nestlé India; target of Rs 13000: ICICI Direct

ICICI Direct's research report on Nestlé India

Net sales for the quarter increased 11.2% YoY to Rs 3,000.9 crore led by robust domestic volume growth driven by aggressive new launches last year. The export sales which contributes 7% to the topline which has witnessed de-growth of 13.9% during the quarter mainly due to lower coffee export to Turkey. Operating profit increased 7.4% to Rs 697.3 crore while margins declined 82 bps to 23.2% on a high base. Net profit increased 10.8% to Rs 437.8 crore on account of higher other income (Rs 73 crore vs. Rs 60 crore in the base quarter). Nestlé India (NIL) has announced an interim dividend of Rs 203/share including special dividend of Rs 180 per share.

Outlook

The stock has seen a run-up in the last three months. Hence, we change our recommendation from BUY to HOLD with a revised target price of Rs 13000/share.