Nestle India hosted an analyst meet wherein the company highlighted its growth strategy, business moats and competitive positioning across the categories. Here are the key takeaways-
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The long-term narratives for Nestle India Ltd.'s revenue and earnings growth are attractive. India's packaged food market offers strong growth opportunities. Nestle has been focusing on its RURBAN strategy; hence, growth was higher in RURBAN markets.
Most of Nestle's categories have been reaping the benefits of distribution penetration. Packaged food penetration has improved in the tier-II and rural markets.
Nestle continues to focus on portfolio enhancement through ongoing innovation and premiumization initiatives.
However, there are near-term risks such as moderating urban consumption and high food inflation, and it is critical to watch operating margins.
We estimate a CAGR of 9%/11%/12% in net sales/Ebitda/ adjusted profit after tax during FY25- 27.
The stock trades at 63x FY26E/56x FY27E EPS, and given its expensive valuation, we maintain a Neutral rating with a target price of Rs 2,400 (based on 60 times P/E Dec'26E).
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