Prabhudas Lilladher's research report on Nestle India
Nestlé posted a strong set of numbers backed by double digit growth across key brands and improving Out of home demand. Fresh set of Lockdowns across the nation on account of increased Covid cases will increase pantry stocking aiding volumes for key brands. We believe NEST’s decision to capitalize on rural growth by increasing village coverage by 33% using 30-40% of relevant products and launching rural centric products will result in strong long term growth given rural and semiurban markets are growing at 2-2.5x of urban. NEST will continue its innovation led growth strategy given high success rate of new products and expect to launch 40-50 new products.
Outlook
We estimate 13.2% PAT CAGR over CY20-22 and assign TP of Rs 18,450 on DCF basis (Rs17,364 earlier). Retain Accumulate, however expect back ended returns given rich valuations of 61.4xCY22 EPS.
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