MOSL: NESTLE INDIA (Neutral) - Performance above expectations
Nestle India: Performance above expectations; maintain Neutral on limited upside
(NEST IN, Mkt Cap USD10.5b, CMP INR7260, TP INR7882, 9% Upside, Neutral)
- Reported net sales increased 15.6% YoY to INR25.9b in 4QCY17. The company’s press release states that domestic comparable sales growth adjusted for GST was 18.1% YoY. Exports grew 12.7% YoY to INR1.9b.
- Gross margin expanded 160bp YoY to 58.7%. Other expenses were down sharply by 240bp YoY. Staff costs too fell 10bp YoY to 10.1%. EBITDA margin, thus, expanded 410bp YoY to 24.4% in 4QCY17. EBITDA grew 38.7% YoY to INR6.3b (est. of INR5.3b). PAT rose 50.2% YoY to INR4.2b (est. of INR3.3b).
- CY17 highlights: Net sales were up 9.7% YoY to INR99.5b. EBITDA margin expanded marginally by 10bp YoY to 21.7%. EBITDA grew 10.1% YoY to INR21.6b. PAT rose 13.2% YoY to INR13.5b.
- Comments on CY17 balance sheet: NWC improved by 3 days to 5 days in CY17, led by lower inventory and higher payables. Improving performance and higher cash flows have resulted in an increase in payout to 66% of adjusted PAT.
Nestle India is engaged in the food business. Co.'s product groups are: milk products and nutrition; beverages; prepared dishes and cooking aids and chocolates and confectionery. Co.'s milk products and nutrition include: NESTLE a+ Milk, NESTLE Slim Milk, NESTLE a+ Dahi, NESTLE Slim Dahi and MILKMAID Sweetened Condensed Milk. Co.'s beverages include: NESCAFE, NESCAFE SUNRISE and NESTEA. Co.'s prepared dishes and cooking aids include: MAGGI Noodles, Veg Atta Noodles, Multigrainz Noodles and 2-Minute Noodles, MAGGI HUNGROOO, MAGGI Magical Masala Noodles, MAGGI Masala-ae-Magic spice mix and MAGGI Soups.Co.'s chocolates and confectionary include: Nestle KITKAT, NESTLE MUNCH and Nestle MILKYBAR.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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