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Neutral Nestlé India; target of Rs 19,500: Motilal Oswal

Motilal Oswal recommended Neutral rating on Nestlé India with a target price of Rs 19,500 in its research report dated July 28, 2022.

July 30, 2022 / 10:43 PM IST
 
 
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Motilal Oswal's research report on Nestlé India


Nestlé India (NEST) declared broadly in-line 2QCY22 result. Volumes and price increases have played an equal part in driving 13.3% sales growth in 1HCY22 with volumes growing 7% and realization making up for the rest. Management pointed out that while there has been some softening in edible oil and packaging costs; milk, green coffee, wheat, etc. are at all-time high levels and are likely to remain firm for some more time. NEST’s strategy of avoiding sharp price hikes, unlike the past, means that nearterm margins would continue to be under pressure. The acquisition of Purina PetCare’s India business (100% owned by Nestle earlier) is a good move from a CG perspective and launch of ‘Gerber’ nutrition brand is good; however, both of these will take time to scale up.



Outlook


We value the stock at 60x Jun'24 EPS to arrive at our TP of INR19,500. Maintain Neutral on fair valuations.

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Nestlé India - 290722 - moti

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first published: Jul 30, 2022 10:43 pm
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