Motilal Oswal - MOSL: Morning India (15/May/17)-1. Economy (CPI/IIP); 2. Yes Bank; 3. Idea Cellular; 4. Nestle India; 5. Dr Reddys Lab; 6. Titan Company

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Motilal Oswal

Team Research

MOSL: Morning India (15/May/17)-1. Economy (CPI/IIP); 2. Yes Bank; 3. Idea Cellular; 4. Nestle India; 5. Dr Reddy's Lab; 6. Titan Company

â€‹MOrning India (15/May/17): 1. Economy (CPI/IIP); 2. Yes Bank; 3. Idea Cellular; 4. Nestle India; 5. Dr Reddy's Lab; 6. Titan Company; 7. JK Cements; 8. Orient Bank; 9. J&K Bank; 10. SH Kelkar

Todayâ€™s top research idea

Nestle India: All-round disappointment despite weak base

-Net sales were up only 8.7% YoY (est. of +20%) to INR24.8b (Ind-AS). EBITDA declined 7.5% YoY (est. of +28%) to INR5.1b, while PAT rose 1.8% YoY (est. of +36.1% YoY) to INR3.1b.

-Gross margin contraction was higher than expected at 80bp (est. of -50bp) to 55.8%. EBITDA margin shrunk 370bp YoY (est. of +150bp) to 20.6%.

-Nestle is no longer the business it was before CY11 (when it used to report consistent double-digit volume growth with over 100% RoCEs) and may never be so. Considering that valuations are rich at 48.9x CY18E EPS, we downgrade to Sell with a revised target price of INR5,715 (39x CY18E EPS, at a 20% discount to three-year avg. multiple).

Piping hot news

GST enters the last mile, all eyes on Srinagar

Later this week, the goods and services tax (GST) Council made up of finance ministers of states and Union territories and headed by finance minister Arun Jaitley will convene in Srinagar.

15/05/2017 40 EN

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MOSL: Morning India (15/May/17)-1. Economy (CPI/IIP); 2. Yes Bank; 3. Idea Cellular; 4. Nestle India; 5. Dr Reddy's Lab; 6. Titan Company

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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