Motilal Oswal - Nestle India Ltd. (NESTLEIND) MOSL: NESTLE INDIA (Upgrading to Neutral)-Silver linings appear among dark clouds

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Motilal Oswal

Krishnan Sambamoorthy

MOSL: NESTLE INDIA (Upgrading to Neutral)-Silver linings appear among dark clouds

â€‹Nestle India: Silver linings appear among dark clouds; Upgrading from Sell to Neutral

(NEST IN, Mkt Cap USD9.9b, CMP INR6595, TP INR6160, 7% Downside, Upgrade to Neutral)

We attended NESTâ€™s analyst meet. Our key takeaways:
New launches have met with good response; contributed 2.8% of sales in 1HCY17.
Mantras that the company is chanting involve volume growth, flexibility of working and simplification.
Volume growth is yet to recover in Milk & Nutrition, but Beverages has witnessed uptick after a long time and Maggi did well off a low base. New products are also supporting volume growth.
Advertising growth â€“ not shared earlier â€“ remains disappointingly low at 6% YoY in 1HCY17, despite 43 products launched between January 2016 and May 2017.
With reasonable success in new launches, signs of pick-up in volumes in a couple of new launches, and limited downside as we roll forward to September 2019 numbers, we upgrade our rating to Neutral.

28/08/2017 14 EN

Underlying

Nestle India Ltd.

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.

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INE239A01016 National Stock Exchange of India India

Provider

Motilal Oswal

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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Analysts

Krishnan Sambamoorthy

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MOSL: NESTLE INDIA (Upgrading to Neutral)-Silver linings appear among dark clouds

MOSL : NESTLÉ INDIA: EBITDA in-line; fair valuation limits upside

MOSL:NESTLÉ INDIA: Result in line; near-term margin outlook challenging

An unfavourable environment weighs on NESTLE INDIA, which sees a downgrade to Neutral

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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