Accumulate Nestle India; target of Rs 17,667: Dolat Capital Market

Dolat Capital Market's research report on Nestle India

Nestlé’s Q3CY20 results beat our estimates on all counts with 10% volume and mix growth in the domestic market. In-house consumption brands witnessed double digit growth – supported by improved supply situation. However, out of home categories continues to remain impacted due to pandemic fears. E-com business (4% contribution) witnessed strong acceleration with 97% growth. Exports increased 9.4% YoY. We have revised our CY20E, CY21E and CY22E EPS estimates at Rs 223 (+4.7%), Rs 264 (+4.4%) and Rs 295 (+5.1%) respectively.

Outlook

Considering niche play and unique positioning in multiple categories, we believe that the stock would continue to command higher premium compared to peers. Valuing the stock at 60x CY22E EPS, we have arrived at TP of Rs 17,667. Upgrade to Accumulate. Buy on dips.

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