Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

Maintain REDUCE on Nestle India - In-line result; steady recovery - HDFC Securities

Posted On: 2020-10-26 04:37:14


Mr. Varun Lohchab, Head Institutional Research & Mr. Naveen Trivedi, Institutional Research Analyst, HDFC Securities

Nestle's 3QCY20 was healthy as the company clocked 10% YoY growth (HSIE 8%). Packaged food category has done well, and Nestle's performance in the past two quarters was steady (6.5% YoY growth). Maggi, Kitkat and Nescafe (in-home consumption) posted double-digit growth. Exports also bounced back with 9% YoY growth. GM expansion was slower at 54bps YoY (58.1%). Cost control initiatives led to EBITDA growth of 16.5% (HSIE 16%). We expect Nestle's recovery to be steady, and we maintain our EBITDA estimates. As the increase in Capex has resulted in lower other income, we cut our EPS estimate for CY21/CY22 by 3/3%. The stock is trading at 60x P/E on CY21 EPS and limits absolute upside in the medium term, making the risk-reward unattractive. We roll forward our target price to Sep-22E EPS and value Nestle at 50x P/E to derive a TP of Rs 14,080. Maintain REDUCE.

Healthy revenue growth: Revenue grew by 10% YoY (+11% in 3QCY19 and +3% in 2QCY20) vs the expectation of 8% YoY growth, driven by volumes and product mix. Domestic revenue grew by 10% YoY while Exports saw 9% YoY growth. Out of home consumption continued to remain muted. E-commerce channel was up 97% YoY (4% of domestic revenue) as MT continued to struggle during the quarter.

Margins in-line: GM expanded by 54bps YoY (-216bps in 3QCY19 and - 193bps in 2QCY20) missing our expectation of +145bps YoY expansion. Employee/Other expenses grew by 15/5% YoY. EBITDA margin saw an expansion of 140bps YoY to 25.6% (-118bps in 3QCY19 and +130bps in 2QCY20), vs our estimate of 172bps YoY expansion. EBITDA grew by 16.5% YoY (HSIE 16%). PBT clocked 12% YoY growth while PAT declined by 1% YoY due to lower tax rate in the base quarter.

Press release takeaways: (1) Out of home demand showed improvement during the quarter; (2) Nestle plans to invest Rs 26bn over the next 3-4 years in manufacturing facilities in India; (3) the company declared an interim dividend of Rs 135 per share.

Shares of NESTLE INDIA LTD. was last trading in BSE at Rs.16256.2 as compared to the previous close of Rs. 15863. The total number of shares traded during the day was 10044 in over 3424 trades.

The stock hit an intraday high of Rs. 16375 and intraday low of 16053.85. The net turnover during the day was Rs. 162864962.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com



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. www.equitybulls.com, 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. www.equitybulls.com 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:

Initiating Coverage on Godrej Properties - The housing factory - HDFC Securities

Burger King IPO - Angel Broking

Rollover Analysis - Record foreign inflows pushes Nifty to 13k - YES Securities

Ceramic tiles industry - Market share gains sustain for top branded players - ICICI Securities

Gas sector - CGD: Competition to hit margins, volumes and lead to derating - ICICI Securities

Cement - Prices resilient in Q3; consensus upgrades to continue - ICICI Securities

Specialty chemicals - Price trend in Sep-20 - ICICI Securities

Timken India - Q2FY21 Company Update - ICICI Direct

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



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

disclaimer copyright © 2005 - 2019