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Nirmal Bang Report
Nestle India Ltd. bucked the lower sales growth trend that has affected packaged foods companies recently (apart from staples category where growth has been slow for a longer time).
Five year sales compound annual growth rate remains healthy at ~12%. Led by ~8% beat on sales, Ebitda and profit after tax were also ahead of our expectations.
We remain constructive about the packaged food growth opportunity in India and Nestle (along with Britannia Industries Ltd.) has been at the forefront in driving growth for the past decade.
Return on capital cmployed are also the best-of-breed. Nevertheless, expensive valuation of ~70 times FY25E earnings per share and ~60 times FY26E EPS lead us to maintain Accumulate rating on the stock.
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