Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  

| More

Nestle India - 3QCY20 results - First Cut - YES SECURITIES

Posted On: 2020-10-23 08:45:01

Mr. Himanshu Nayyar, Lead Analyst - Institutional Equities, YES SECURITIES

Nestle India 3QCY20 results - Growth trajectory normalizes with double-digit growth in key brands; company announces aggressive expansion plans - reiterate ADD

Beat on both topline and margins- Nestle reported a much better than expected performance with sales/EBITDA/PAT growth of 10%/15%/12% vs our expectation of 7%/12%/7% respectively.

Quarter highlights - Company has planned Rs 2600cr capex over next 3-4 years (greenfield facility at Sanand, Gujarat and augmentation of other plants), normal production has resumed at all factories, key brands have grown in double-digits led by in-home consumption, out of home demand has also improved, e-commerce sales grew 97% now contributing 4% to sales.

Topline - Revenue came in at Rs 35.4bn, up 10.1% (back to double-digit growth after a sharp decline to 1.7% in last quarter) led by double-digit growth in Maggi Noodles, Maggi Sauces, Kitkat, Munch and Nescafe. While domestic sales increased by 10.2%, export sales were also up by 9.4% after falling for last few quarters. Demand for out of home channel improved but still remains impacted by COVID.

Margins - Gross margins improved by 60bps to 58.1% led by lower milk prices despite a relatively inferior mix, while EBITDA margins improved by 110bps to 24.9% led by reduction in overhead costs due to restricted operations partially offset by higher incentives offered to production manpower.

Earnings - PBT growth of 12% was impacted by higher interest costs and lower other income (fall in yields). PAT, however, saw a decline of 1% to Rs 5.87bn due to the tax reversal in the base quarter.

Dividend - The company maintained its generous dividend payouts with an interim dividend of Rs 135 per share.

Valuation and view- We expect a positive reaction to this strong set of earnings; stock is currently trading at 52x CY22E earnings and remains one of our top picks in the staples space. We would review our estimates and call post the investor meet scheduled on 5th November. We reiterate our ADD rating with a PT of Rs 18,180 based on 60x CY22E earnings, implying an upside of 15%.

Risk - One headwind could be on account of the probable royalty caps being imposed by the government which might require the company to obtain government approvals to sustain their annual payouts.

Shares of NESTLE INDIA LTD. was last trading in BSE at Rs.15863 as compared to the previous close of Rs. 15911.25. The total number of shares traded during the day was 3205 in over 1461 trades.

The stock hit an intraday high of Rs. 16066.15 and intraday low of 15815.35. The net turnover during the day was Rs. 50953727.

Source: Equity Bulls

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

Upgrade in target price of IDFC First Bank - Angel Broking

Laurus Labs stake acquisition in Richore Lifesciences - Angel Broking

Shares of Lakshmi Vilas Bank (LVB) suspended from trading - Angel Broking

Initiating Coverage on Sundram Fasteners - Fastening growth - HDFC Securities

Astral Poly Technik - Scalability to further improve with storage tanks foray - ICICI Securities

Vardhman Special Steel - Q2FY21 Company Update - ICICI Direct

Initiating Coverage - Advanced Enzyme Technologies - ICICI Direct

L&T - Secures Large Contract - Nov 25, 2020 - Angel Broking

Alembic Pharmaceuticals - Tentative Approval for JV - Angel Broking

Drug launch by Lupin - Tacrolimus Capsules - Angel Broking

Gujarat Gas - Nov 25, 2020 - Angel Broking

Metropolis Healthcare - Nov 25, 2020 - Angel Broking

NTPC - Showcase of strength & competitiveness - ICICI Securities

Telecom - Market Share TRACKER - Bharti is narrowing the gap on incremental market share vs RJio - ICICI Securities

Cochin Shipyard - Q2FY21 Result Update - ICICI Direct

Engineers India - Q2FY21 Result Update - ICICI Direct

Rupee - Nov 24, 2020 - Reliance Securities

FMCG Sector Update - Recovery unlocked; lower growth divergence - HDFC Securities

Engineers India - Consultancy segment outperformance - ICICI Securities

Engineers India - Q2 FY21 Result Update - YES SECURITIES

Motherson Sumi Systems - Company Update - Virtual Investor Conference - ICICI Direct

Mutual Fund Review - November, 2020 - ICICI Direct

Sadbhav Engineering - Q2FY21 Company Update - ICICI Direct

IRB Infrastructure - Q2FY21 Company Update - ICICI Direct

Vodafone Idea fund raising - Angel Broking

Rupee - Nov 23, 2020 - Reliance Securities

Crude Oil - Nov 23, 2020 - Reliance Securities

Q2FY21 Bank Result Quick Review - Angel Broking

Banks & NBFC's Sector Update Report - Yet another watershed moment? - HDFC Securities

Galaxy Surfactants - EBITDA/kg has an upside risk - ICICI Securities

Diagnostics - COVID-19 tests continue to trend higher - ICICI Securities

Banking & Financial Services - Sector Update - Nov 22, 2020 - ICICI Direct

Dalmia Bharat Sugar - Q2FY21 Company Update - ICICI Direct

Balkrishna Industries - Industry export growth momentum continues - ICICI Securities

Covid Recovery Pulse - Festive positivity continues in auto retails, E-way bill generation improves... - ICICI Direct

Quant Pick - Exide Industries - ICICI Direct

Shankara Building Products - Q2FY21 Company Update - ICICI Direct

Triveni Engineering - Q2FY21 Company Update - ICICI Direct

Initiating Coverage on Sudarshan Chemical - Leaping into the league of giants - HDFC Securities

Earnings Wrap Q2FY21: Earnings outperform, post Covid recovery picks up steam - ICICI Direct

Vodafone Idea Positive development beneficial for IDFC first bank - Angel Broking

Lakshmi Vilas Bank - Angel Broking

WIPRO Buyback record date announcement - Angel Broking

TCS buyback record date announcement - Angel Broking

Banks Sector Update - Collection efficiency - a positive surprise! - HDFC Securities

Quant Pick - Max Financial Services - ICICI Direct

Graphite India - Q2FY21 Result Update - ICICI Direct

Gladiator Stocks - Maruti Suzuki India - ICICI Direct

Exide Industries - Q2FY21 Result Update - ICICI Direct

Mishra Dhatu Nigam - Execution outlook remains strong - ICICI Securities

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2019