Sharekhan's research report on Nestle India
Nestle India Limited (Nestle) posted strong performance in Q1CY23 ahead of expectation. Revenues grew by 21.3% y-o-y to Rs. 4,830.5 crore; OPM declined by 55 bps y-o-y to 22.7% and PAT grew by 23.9% y-o-y to Rs. 736.7 crore.. Domestic volumes recovered sequentially to mid-single digit (4-5% in Q1); excluding Maggi low unit packs, volume growth stood in low double digits. We expect volume growth momentum to sustain in the quarters ahead. A surge in milk and green coffee prices will keep pressure on the margins in the near term. Softening of edible oil, packaging material and wheat prices from highs might provide a breather in H2.
Outlook
Stock trades at 66.0x, 57.0x and 47.8x its CY2023E, CY2024E and CY2025E EPS, respectively. We maintain a Buy on the stock with a revised PT of Rs. 22,990.
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