Motilal Oswal's research report on Nestlé India
NEST’s 1QCY23 numbers beat our expectations on all parameters, with overall sales growth of 21% v/s our estimate of 9%. It was driven by doubledigit growth across product categories, led by a better mix, healthy volume and better pricing, along with rapid acceleration in the out-of-home (OOH) business during the quarter. Gross margin contracted 150bp YoY/110bp QoQ to 53.8% and was 70bp lower than our expectation. The management commentary highlights early signs of a softening in the costs of edible oils, wheat and packaging materials, even as the costs of fresh milk, fuels and green coffee are expected to remain firm in the near-to-medium term.
Outlook
We value the stock at 55x Mar’25E EPS to arrive at our TP of INR20,500. We reiterate our Neutral stance on fair valuations.
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