Accumulate Nestle India; target of Rs 21,021: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on Nestle India with a target price of Rs 21,021 in its research report dated February 16, 2023.

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February 17, 2023 / 16:03 IST

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Nestle India

Nestle remains positive on LT growth opportunity with focus on innovations, RURBAN penetration, sharp initiative led efficiency and optimum use of emerging trade channels. We believe Rs50 bn capex (Rs13,20,17bn) over next three years is testimony of growth potential even though we expect Nestle to cut dividend payout to fund growth plans. 4QCY22 results were slightly ahead of estimates, led by better than expected margins, superior margin mix and strong growth across large metros & smaller towns and across channels particularly MT, OOH & E-commerce. Long term growth drivers remain intact, led by 1) sustained expansion in rural reach (~ 20% of sales) 2) capacity increase in Maggi and confectionary 3) huge scope of growth in segments like coffee, RTD & Chocolates and 4) channels of future like E-commerce (6.5% of revenues). We estimate 11.2% PAT CAGR over CY21-24.

Outlook

We expect moderate returns in near term given pending capex and rich valuations of 59x CY24 EPS. Maintain Accumulate with a DCF based TP of Rs21,021 (Rs20,201 earlier).

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