Motilal Oswal - Nestle India Ltd. (NESTLEIND) MOSL: NESTLE INDIA (Neutral)-Good going, good prospects but fairly reflected in valuations

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Motilal Oswal

Krishnan Sambamoorthy

MOSL: NESTLE INDIA (Neutral)-Good going, good prospects but fairly reflected in valuations

NESTLE INDIA: Good going, good prospects but fairly reflected in valuations

(NEST IN, Mkt Cap USD15b, CMP INR10888, TP INR10620, 2% Downside, Neutral)

We attended Nestle India's (NEST) Analyst Meet 2018. Key takeaways:

Over the past six quarters (starting 1QCY17), NEST's volumes have increased impressively at 11.3%, 7.7%, 8.9%, 18%, 6.9% and 11.5% YoY (note that volumes data was not shared in the interim quarterly results).
NEST has been able to expand its market share in pasta and coffee (claims to be the market leader again). The share in other categories has been stable.
Domestic volume growth was mixed in 1HCY18. Prepared Dishes & Cooking Aids (PDCA) and Powdered & Liquid Beverages volumes grew at a strong 12.8% and 9.2%, respectively. On the other hand, Milk products & nutrition (M&N) and Confectionary volumes grew at a relatively slow rate of 4.6% and 6.1%, respectively.
New products contributed 3% of sales in 1HCY18, as against 2.8% in the year-ago period (2.6% in CY17). Of the 36-38 new products launched recently, around 25 have been retained. The rest did not scale up as expected, and thus, were either culled or pulled back to the drawing board.

23/08/2018 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 (Neutral)-Good going, good prospects but fairly reflected in valuations

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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