Nestle India - Best Proxy On Great Indian Consumption Story: HDFC Securities

"NDTV Profit’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 NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..HDFC Securities Institutional Equities.We believe Nestle India Ltd. has the potential for double-digit revenue growth in the medium term, unlike peers struggling with high single-digit growth, owing to several factors:ramping up its rural distribution network, currently underindexed;focusing on substantial growth in its out-of-home channel;prioritizing the salience of new product development and category creation efforts;investing in capacity expansion (with a capex of Rs 65 billion over CY20-25) to align with long term penetration-led volume growth objectives;India’s prioritization as one of the top 10 markets despite contributing only 2% of global revenue. We also expect the Ebitda margin to expand c100 bps from FY24-27 to 25%, despite being at a decadal high, owing to operational scale improvements, premiumisation, and cost optimisation initiatives. .We upgrade Nestle to Add from Reduce with a target price of Rs 2,750 (70 times FY26 EPS) and recommend investors to accumulate the stock amidst any negative news flows. .Key near-term risks include-elevated raw material index (particularly cocoa and coffee);FSSAI probe on Cerelac, which, if unfavorable, could impact customer trust in other consumer infant milk and nutrition-related brands;potential disproportionate increase in royalty/other payouts to the parent company (royalty rate is expected to increase from 4.5% in CY23 to 5.25% in CY28)..Click on the attachment to read the full report:.Bajaj Auto Gets A New Flagship In Pulsar NS400Z.DISCLAIMERThis report is authored by an external party. NDTV Profit 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 NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner."

Nestle India - Best Proxy On Great Indian Consumption Story: HDFC Securities

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