Hold Nestle India: target of Rs 16,500: ICICI Securities

ICICI Securities research report on Nestle India

Our assertion / hypothesis: Nestlé’s infant nutrition business (~30% of revenues and ~40% of profits) will likely face growth headwinds in CY2021 due to consumers (now) delaying plans of having infants / babies due to fear of visiting hospitals. Given the premium pricing of infant nutrition products, the consuming households are mostly the upper-middle class / middle class, in our view. We have drawn conclusions from (1) our primary research with pharmaceutical companies and (2) secondary sales data (market research) from AIOCD-AWACS (MUST see charts 1-3).

Outlook

Though we are believers in Nestlé’s long-term story, our current neutral stance is intact (given that only a part of its portfolio (Maggi and (somewhat) Coffee) would benefit from increased in-home consumption). HOLD rating retained.

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