Nestle India reported second-quarter earnings above estimates on Thursday; Should you buy?
Nestle Share Price: Nestle India reported second-quarter earnings above estimates on Thursday, benefitting from price increases and demand for its chocolates and packaged foods, including Maggi noodles.
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Nestle India reported a net profit of Rs 698.34 crore for the quarter ended on June 30, 2023, a jump of 37 per cent on a year-on-year (YoY) basis. The company had clocked a profit bottomline of Rs 510.24 crore in the same quarter a year ago, the company said in its statement.
At 11:50 am, Nestle Ind was trading at Rs 22447.8, up 0.53 per cent from yesterday’s close.
Nestle India’s revenue from operations increased about 17 per cent on YoY basis 4,658.5 crore in the June 2023 quarter, which was Rs 4,045.7 crore in the same quarter previous year, the company statement added. The results are in-line with the street’s expectations.
“We have delivered a robust performance, with all product groups registering double digit growth. This is the fifth quarter in a row of double-digit growth across all product groups. Domestic sales growth is broad based and grew by 14.6 per cent, on the back of prudent pricing and supported by mix and volume with targeted brand support. Key brands continued to perform well,” said Suresh Narayanan, Chairman and Managing Director at Nestle India in a statement.
Nestle announced its tenth factory in Odisha after receiving an ‘in-principle’ approval from Industrial Promotion & Investment Corporation of Odisha Limited (IPICOL).
‘Make in India’ has always remained the cornerstone of our industrial footprint strategy and I am pleased to announce that Odisha has been identified as the state that will be home to Nestlé India’s tenth factory, Narayanan added. “Like all our other factories, the Odisha factory too will remain committed to serve the local communities through relevant societal initiatives.”
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On the last day of trading, Nestle India’s stock opened at Rs 22,899 and closed at Rs 22,804.45. The stock’s high for the day was Rs 22,899 and the low was Rs 22,081.75. The market capitalization of Nestle India is Rs 215,302.08 crore. The stock’s 52-week high is Rs 23,390 and the 52-week low is Rs 17,888. The BSE volume for the day was 4,639 shares.
What Should Investors Do Now?
Jefferies recommended a ‘Hold’ on Nestle India for a price target of Rs 19,900. The company witnessed a volume miss offset by margin expansion, the brokerage noted. Revenue growth was broad-based across cities and towns and also product segments. Like the packaged food story, but valuations are expensive, it said.
Nuvama recommended a ‘Buy’ on the FMCG heavyweight with a price target of Rs 25,810. Nestlé’s Q2CY23 revenue grew as per the estimates of Nuvama while EBITDA/PAT growth was ahead of estimates. This is the fifth consecutive quarter of double-digit growth across all product groups and the company did well in both urban and rural pockets aided by proactive steps, the brokerage said.
Nestle will be opening its tenth factory in India at Odisha, showing confidence in long-term growth. “We roll forward to Q2CY25E, yielding a revised target price of Rs 25,810 from earlier Rs 24,965,” the brokerage said, calling Nestle one of its top picks.
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In ICICI Securities’ opinion, Nestle is likely to witness industry-leading sales-driven growth as they have plans to aggressively expand their distribution. The brokerage maintains an ‘Add’ for an unchanged target price of Rs 24,500.
