MOSL: NESTLE INDIA (Neutral)-Healthy topline growth-Commodity inflation impacts margins
Nestle India: Healthy topline growth; Commodity inflation impacts margins
(NEST IN, Mkt Cap USD19.6b, CMP INR14474, TP INR14034, 3% Downside, Neutral)
3QCY19 net sales grew 9.4% YoY to INR32.2b (v/s est. INR31.9b). Domestic sales grew 10.5%, largely driven by volume and mix. Export sales declined 7.1% due to lower coffee exports to Turkey. EBITDA grew 2.4% YoY to INR7.6b (v/s est. INR8.1b); PBT grew 2.8% YoY to INR7.1b (v/s est. INR7.6b) and Adj. PAT grew 30.4% YoY to INR6b (v/s est. INR5.1b) due to lower corporate taxes.
- Gross margins were down 220bp YoY to 57.6% due to higher commodity costs, particularly milk and its derivatives in 3QCY19. Staff costs as % of sales increased marginally (+10bp YoY to 10.0%) but were more than offset by other expenses as % of sales (-70bp YoY to 23.9%). EBITDA margin contracted 160bp YoY to 23.6%.
- Other income was down 16% YoY in 3QCY19 due to lower-than-average liquidity and lower yields.
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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