Reduce Nestle India, target price Rs 17572: HDFC Securities

HDFC Securities has reduce call on Nestle India with a target price of Rs 17572. The current market price of Nestle India Ltd. is Rs 19168.75.

Time period given by analyst is one year when Nestle India Ltd. price can reach defined target. .

Nestle India Ltd., incorporated in the year 1959, is a Large Cap company (having a market cap of Rs 193234.93 Crore) operating in FMCG sector.

Nestle India Ltd. key Products/Revenue Segments include Milk Products, Prepared Dishes & Cooking aids, Confectionery, Beverages (Powdered), Export Incentives, Other Operating Revenue for the year ending 31-Dec-2020.


Financials
For the quarter ended 30-09-2021, the company reported a Standalone Total Income of Rs 3916.23 Crore, up 11.70 % from last quarter Total Income of Rs 3506.17 Crore and up 9.51 % from last year same quarter Total Income of Rs 3576.17 Crore. Company reported net profit after tax of Rs 617.37 Crore in latest quarter.


Investment Rationale
The brokerage expects Nestle to sustain healthy growth for in-home products (aided by its ecommerce and hyper-local channels) and recovery in OOH products (higher mobility). The brokerage maintains EPS estimates for CY21E/CY22E/CY23E and value Nestle at 55x P/E on Sep-23E EPS to derive a TP of INR 17,572. With rich valuation, the absolute upside is limited in the medium term, making the risk-reward unattractive.

Promoter/FII Holdings
Promoters held 62.76 per cent stake in the company as of 30-Sep-2021, while FIIs owned 12.31 per cent, DIIs 8.0 per cent.