Nestle Research: HDFC Securities - Buy
With aggressive product launches, improved distribution reach, favourable demand scenario, we believe Nestle is poised to grow at a rapid pace in the future.
By ET Bureau |
Nestle Research: HDFC Securities - Buy
Rating: Buy
CMP: Rs 91
With aggressive product launches, improved distribution reach, favourable demand scenario, we believe Nestle is poised to grow at a rapid pace in the future. Changing lifestyle, increasing number of nuclear families, changing consumer tastes, increasing disposable incomes could accelerate growth for Nestle.
Earlier, we had mentioned that usually second quarter on a sequential basis is a subdued quarter and we had expressed our concerns regarding Nestl��'s ability to combat the increasing raw material prices.
The fall in the margins in the second quarter reaffirms our concerns and we believe that investors can take profits in the stock at these levels (with 15% upside for the fresh investors) ahead of the target price of Rs.1,850. Premium in valuation of defensive stocks have expanded in recent times as market P/E has shrunk, while Nestle���s P/E has remained constant.
In a scenario where operating margins seems to be under pressure, this premium in valuation could narrow. We are still bullish on the medium term prospects of Nestle as its product range gives it a distinct position in the FMCG space.
Rating: Buy
CMP: Rs 91
With aggressive product launches, improved distribution reach, favourable demand scenario, we believe Nestle is poised to grow at a rapid pace in the future. Changing lifestyle, increasing number of nuclear families, changing consumer tastes, increasing disposable incomes could accelerate growth for Nestle.
Earlier, we had mentioned that usually second quarter on a sequential basis is a subdued quarter and we had expressed our concerns regarding Nestl��'s ability to combat the increasing raw material prices.
The fall in the margins in the second quarter reaffirms our concerns and we believe that investors can take profits in the stock at these levels (with 15% upside for the fresh investors) ahead of the target price of Rs.1,850. Premium in valuation of defensive stocks have expanded in recent times as market P/E has shrunk, while Nestle���s P/E has remained constant.
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In a scenario where operating margins seems to be under pressure, this premium in valuation could narrow. We are still bullish on the medium term prospects of Nestle as its product range gives it a distinct position in the FMCG space.
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