Reduce Nestle India, target price Rs 18500: HDFC Securities

HDFC Securities has reduce call on Nestle India with a target price of Rs 18500.The current market price of Nestle India is Rs 19771.5.

Nestle India, incorporated in the year 1959, is a Large Cap company (having a market cap of Rs 190708.36 Crore) operating in FMCG sector.

Nestle India key Products/Revenue Segments include Milk Products, Prepared Dishes & Cooking aids, Confectionery, Beverages (Powdered), Export Incentives, Other Operating Revenue for the year ending 31-Dec-2021.


Financials
For the quarter ended 30-09-2022, the company has reported a Standalone Total Income of Rs 4621.64 Crore, up 13.95 % from last quarter Total Income of Rs 4055.94 Crore and up 18.01 % from last year same quarter Total Income of Rs 3916.23 Crore. Company has reported net profit after tax of Rs 668.34 Crore in latest quarter.

The company’s top management includes Mr.Suresh Narayanan, Mr.David S McDaniel, Mr.Matthias C Lohner, Mr.Rajya Vardhan Kanoria, Dr.Swati A Piramal, Ms.Rama Bijapurkar, Ms.Roopa Kudva, Mr.P R Ramesh. Company has B S R & Co. LLP as its auditors. As on 30-09-2022, the company has a total of 10 Crore shares outstanding.

Investment Rationale
The brokerage models 17% YoY revenue growth. Three-year revenue CAGR at 12%. Further, it models 100bps sequential improvement in gross margin to 54% while it will be down +300bps YoY.

Promoter/FII Holdings
Promoters held 62.76 per cent stake in the company as of 30-Sep-2022, while FIIs owned 11.65 per cent, DIIs 8.81 per cent.