Nestle India Q1 Results Review — Volume Neutralises Raw Material Price Inflation: Prabhudas Lilladher

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. .Prabhudas Lilladher Report.We increase CY23/24 earnings per share estimates of Nestle India Ltd. by 1.6%/0.7% following strong revenue performance with 5% volume growth (excluding low unit packs Maggi 11-12%). However, we trim our gross margin estimates by 50 basis points/20 bps in CY23/24 as rising prices of milk (~40% of raw material basket) might delay margin recovery. Growth momentum remains intact across large metros and rural markets with growth across all channels like modern trade, out-of-home and e-commerce. Medium to long term growth drivers remain intact, led by-sustained expansion in rural reach (~ 20% of sales),availability of capacity in Maggi post expansion,huge scope of growth in segments like coffee, ready-to-drink and chocolates andchannels of future like e-commerce as well as newly launched direct-to-consumer website platform - mynestle.in. Nestle India is expected to gain from lower costs of palm oil, but firm prices of milk, fuel and coffee will curtail gains. However as margins in Q2 FY22/Q3 FY22 were lower by 130/260 bps than Q1 FY22 levels, expect QoQ margin expansion in next two quarters. We factor in Ebitda margin improvement of 100 bps in CY23 and 150 bps over CY22-24. We estimate 18.0% profit after tax compound annual growth rate over CY22-24. We expect moderate returns given rich valuations of 58.8 times CY24 earnings per share..Click on the attachment to read the full report:.More Research Reports On Nestle India's Q1 CY23 Results Review.Robust Growth Across Categories: ICICI DirectBeat On Growth, Resilient Margins Merit Outperformance: SystematixStrong Growth Across Verticals: Dolat Capital.DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Nestle India Q1 Results Review — Volume Neutralises Raw Material Price Inflation: Prabhudas Lilladher

Raw material basket mixed, margins expected to improve sequentially from Q2 FY23.

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