13 may 2020 results review 1qcy20 nestle india - 1qcy20...press release takeaways: (1) growth in...
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13 May 2020 Results Review 1QCY20
Nestle India
HSIE Research is also available on Bloomberg ERH HDF <GO> & Thomson Reuters
Outperformance continues
Nestle’s performance in 1QCY20 was ahead of estimates as the co continued
its strong growth despite the disruption caused by Covid-19. Most players
faced supply chain and channel liquidity issues during the last 10-15 days of
March. Hence, domestic revenue growth of 11% yoy reflects that Nestle’s
performance pre-Covid was strong. Pantry loading supported packaged food
business despite lockdown impact (Marico’s Saffola posted 25% growth).
Brands such as Maggi, Kitkat and Munch continued to drive growth for
Nestle even as out of home consumption slumped. The rise in Ecomm’s
contribution in revenues is a positive sign as the surge of Ecomm will benefit
bigger brands and aid them in gaining market share. Despite beat in 1Q, we
do not see any change in our annual estimates. We maintain our EPS estimates
for CY20/CY21/CY22. The recent sharp re-rating amidst flight to safety (+34%
since 23rd March) limits any upsides in the medium term and makes the risk-
reward unattractive. We value Nestle at 47x on Mar-22E EPS, and derive a TP
of Rs 14,042. Maintain REDUCE.
Revenue outperformance continues: Net revenues grew by 11% yoy (+9%
in 1QCY19 and +9% in 4QCY19) vs exp of 1% decline. We had modeled 10%
growth pre-Covid and zero primary sales in the last 10 days. However,
pantry loading supported the growth and domestic sales grew by strong
11% yoy (+10% in 1QCY19 and +10% in 4QCY19). Domestic revenue was
driven by both volume as well an improved mix. Exports saw a strong
growth of 13% yoy supported by favourable base (-9% in 1QCY19 and -10%
in 4QCY19).
Margin pressure sustained: GM contracted by 223bps yoy to 56.3% (-57bps
in 1QCY19 and -218bps in 4QCY19) vs. exp of -152bps. Margin impact was
sharp despite product mix was favorable. Employee/ Other expenses grew
by 19/3% yoy. EBITDA margin saw contraction of 146bps yoy to 24.4% (-
29bps in 1QCY19 and +94bps in 4QCY19) vs expectation of -122bps. EBITDA
grew by 5% yoy. We expect raw material pressure will ease out in the
coming quarters.
Press Release takeaways: (1) Growth in revenue was led by volume as well
as mix, (2) Maggi, Kitkat and Munch delivered strong performance, (3) E-
comm registered strong growth and contribution from the channel surged,
(4) Co witnessed subdued out of home consumption, (5) Pressure on gross
margins due to inflation in milk products continued in 1QCY20.
Maintain REDUCE: Nestle’s valuation doesn’t provide an upside in the
stock. Although Nestle’s performance in CY20 will be healthier than peers
but most positives are priced-in. We maintain REDUCE rating.
Financial Summary
YE Mar (Rs mn) Q1
CY20
Q1
CY19
YoY
(%)
Q4
CY19
QoQ
(%) CY19P CY20E CY21E CY22E
Net Sales 33,253 30,030 10.7 31,493 5.6 123,689 136,033 150,324 166,574
EBITDA 8,103 7,755 4.5 7,027 15.3 29,301 32,395 36,722 41,583
APAT 5,254 4,762 10.3 4,866 8.0 19,858 22,913 26,820 31,625
Diluted EPS (Rs) 54.5 49.4 10.3 50.5 8.0 206.0 237.6 278.2 328.0
P/E (x)
84.8 73.5 62.8 53.2
EV / EBITDA (x)
56.4 50.6 44.3 38.7
RoCE (%)
75.0 70.7 69.1 77.6
Source: Company, HSIE Research
REDUCE
CMP (as on 12 May 2020) Rs 17,462
Target Price Rs 14,042
NIFTY 9,197
KEY
CHANGES OLD NEW
Rating REDUCE REDUCE
Price Target Rs 14,042 Rs 14,042
EPS % CY20E CY21E
- -
KEY STOCK DATA
Bloomberg code NEST IN
No. of Shares (mn) 96
MCap (Rs bn) / ($ mn) 1,684/22,338
6m avg traded value (Rs mn) 1,842
52 Week high / low Rs 18,370/9,966
STOCK PERFORMANCE (%)
3M 6M 12M
Absolute (%) 7.1 23.8 73.3
Relative (%) 31.7 46.0 89.6
SHAREHOLDING PATTERN (%)
Dec-19 Mar-20
Promoters 62.76 62.76
FIs & Local MFs 8.92 9.12
FPIs 12.07 11.81
Public & Others 16.25 16.31
Pledged Shares 0.0 0.0
Source : BSE
Varun Lohchab
varun.lohchab@hdfcsec.com
+91-22-6171-7334
Naveen Trivedi
naveen.trivedi@hdfcsec.com
+91-22-6171-7324
Aditya Sane
aditya.sane@hdfcsec.com
+91-22-6171-7336
Page | 2
Nestle India: Results Review 1QCY20
Quarterly standalone Financial Snapshot
Particulars (Rs mn) Q1CY20 Q1CY19 YoY
(%) Q4CY19
QoQ
(%) CY19 CY18
YoY
(%)
Domestic sales 31,242 28,216 10.7 29,608 5.5 1,16,568 1,05,075 10.9
Export Sales 1,816 1,608 12.9 1,700 6.8 6,385 7,087 (9.9)
Total Revenue 33,058 29,824 10.8 31,307 5.6 1,22,953 1,12,162 9.6
Other Operating Income 195 206 (5.2) 186 5.1 736 760 (3.2)
Net Revenue 33,253 30,030 10.7 31,493 5.6 1,23,689 1,12,923 9.5
Material Expenses 14,533 12,453 16.7 13,614 6.7 52,239 45,902 13.8
Employee Expenses 3,584 3,018 18.7 3,220 11.3 12,604 11,242 12.1
Other Operating Expenses 7,033 6,803 3.4 7,632 (7.8) 29,259 28,181 3.8
EBITDA 8,103 7,755 4.5 7,027 15.3 29,587 27,598 7.2
Depreciation 914 914 (0.0) 936 (2.4) 3,438 3,398 1.2
EBIT 7,190 6,842 5.1 6,091 18.0 26,149 24,200 8.1
Other Income 429 732 (41.5) 447 (4.1) 2,469 2,589 (4.7)
Interest Cost 410 339 20.8 311 31.6 1,249 1,120 11.5
PBT 7,039 7,006 0.5 6,141 14.6 26,738 24,220 10.4
Exceptional item - - na - na - 69 (100.0)
PBT after exceptional 7,039 7,006 0.5 6,141 14.6 26,738 24,290 10.1
Tax 1,784 2,379 (25.0) 1,415 26.1 7,051 8,220 (14.2)
PAT 5,254 4,627 13.5 4,726 11.2 19,687 16,070 22.5
Exceptional (net of taxes) - - na - na - - na
APAT 5,254 4,627 13.5 4,726 11.2 19,687 16,070 22.5
EPS (adjusted) 54.5 48.0 13.5 49.0 11.2 204.2 166.7 22.5
Source: Company, HSIE Research
Quarterly Performance Analysis
(% of Revenues) Q1CY20 Q1CY19 YoY
(bps) Q4CY19
QoQ
(bps) CY19 CY18 YoY (bps)
Domestic sales 94.0 94.0 (1) 94.0 (6) 94.2 93.1 119
Export Sales 5.5 5.4 10 5.4 6 5.2 6.3 (111)
Material Expenses 43.7 41.5 223 43.2 48 42.2 40.6 159
Employee Expenses 10.8 10.1 73 10.2 55 10.2 10.0 23
Other Operating Expenses 21.1 22.7 (150) 24.2 (308) 23.7 25.0 (130)
EBITDA Margin (%) 24.4 25.8 (146) 22.3 206 23.9 24.4 (52)
Tax (%) 5.4 7.9 (256) 4.5 87 5.7 7.3 (158)
APAT Margin (%) 15.8 15.4 39 15.0 79 15.9 14.2 169
Source: Company, HSIE Research
Domestic revenue rose 11%
with exports increasing
13%
Employee/ Other expenses
increased by 19/3%
GM contracted by 223bps
yoy to 56.3% (-57bps in
1QCY19 and -218bps in
4QCY19) vs. exp of -152bps
EBITDA margin saw
contraction of 146bps yoy
to 24.4% (-29bps in
1QCY19 and +94bps in
4QCY19) vs expectation of
-122bps.
Page | 3
11
Nestle India: Results Review 1QCY20
Revenue Growth Volume Growth
Source: Company, HSIE Research Source: Company, HSIE Research
Gross Margin EBITDA Margin
Source: Company, HSIE Research
Source: Company, HSIE Research
Revenue Mix (CY19) Revenue CAGR
Source: Company, HSIE Research
Source: Company, HSIE Research
-18.0%
-9.0%
0.0%
9.0%
18.0%
Q1
CY
17
Q2
CY
17
Q3
CY
17
Q4
CY
17
Q1
CY
18
Q2
CY
18
Q3
CY
18
Q4
CY
18
Q1
CY
19
Q2
CY
19
Q3
CY
19
Q4
CY
19
Q1
CY
20
Domestic Sales Export Sales
0%
4%
8%
12%
16%
Q1
CY
17
Q2
CY
17
Q3
CY
17
Q4
CY
17
Q1
CY
18
Q2
CY
18
Q3
CY
18
Q4
CY
18
Q1
CY
19
Q2
CY
19
Q3
CY
19
Q4
CY
19
Q1
CY
20
52%
55%
57%
60%
62%
-
4,000
8,000
12,000
16,000
20,000
Q1
CY
16
Q2
CY
16
Q3
CY
16
Q4
CY
16
Q1
CY
17
Q2
CY
17
Q3
CY
17
Q4
CY
17
Q1
CY
18
Q2
CY
18
Q3
CY
18
Q4
CY
18
Q1
CY
19
Q2
CY
19
Q3
CY
19
Q4
CY
19
Q1
CY
20
Gross Profit Gross Margin
17%
20%
22%
25%
27%
-
2,000
4,000
6,000
8,000 Q
1C
Y16
Q2
CY
16
Q3
CY
16
Q4
CY
16
Q1
CY
17
Q2
CY
17
Q3
CY
17
Q4
CY
17
Q1
CY
18
Q2
CY
18
Q3
CY
18
Q4
CY
18
Q1
CY
19
Q2
CY
19
Q3
CY
19
Q4
CY
19
Q1
CY
20
EBITDA EBITDA Margin
Milk &
Nutrition
Prepared
Dishes
Beverages
Chocolates
5%
14%
6% 5% 5%
10%
16%
8% 8%
10%
0.0%
4.5%
9.0%
13.5%
18.0%
Mil
k &
Nu
trit
ion
Pre
pa
red
Dis
hes
Bev
era
ges
Ch
oco
late
s
To
tal
5 Yr CAGR 10 Yr CAGR
Page | 4
11
Nestle India: Results Review 1QCY20
Assumptions
Particulars CY13 CY14 CY15 CY16 CY17 CY18 CY19P CY20E CY21E CY22E
Revenue Growth (%)
Milk and Nutrition 5.5 12.4 2.1 (0.7) 6.2 7.6 8.6 8.1 9.5 9.8
Prepared dishes & Cooking Aids 11.0 9.7 (55.6) 76.4 19.9 14.7 12.9 18.7 12.2 12.5
Beverages 17.9 1.2 (0.3) (3.7) 15.0 9.8 7.0 5.0 10.5 10.8
Chocolates 10.0 (2.6) (11.4) 5.4 9.7 14.7 8.9 2.0 10.0 10.0
Total Revenue 9.3 8.0 (16.8) 11.6 11.0 10.7 9.6 10.0 10.5 10.8
Gross Margin 54.6 54.0 57.5 57.5 56.8 59.4 57.8 56.5 57.4 58.0
ASP (% of revenue) 4.4 4.5 6.4 5.5 5.1 6.5 5.6 5.0 5.2 5.2
Distribution (% of revenue) 4.8 4.9 4.8 4.8 4.8 4.7 4.6 4.4 4.5 4.6
EBITDA Margin 22.0 21.2 20.3 22.6 22.5 24.4 23.7 23.8 24.4 25.0
Tax Rate (%) 33.7 33.2 30.8 35.2 33.4 33.8 25.2 25.2 25.2 25.2
APAT Margin 11.6 11.6 11.9 12.3 13.1 14.9 16.1 16.8 17.8 19.0
Source: Company, HSIE Research
Page | 5
11
Nestle India: Results Review 1QCY20
Change in Estimates
CY20 CY21E CY22E
OLD NEW Chg (%) OLD NEW Chg (%) OLD NEW Chg (%)
Net Sales 134,524 136,033 1 148,647 150,324 1 164,711 166,574 1
EBITDA 32,408 32,395 (0) 36,830 36,722 (0) 41,640 41,583 (0)
APAT 22,922 22,913 (0) 26,900 26,820 (0) 31,665 31,625 (0)
EPS 238 238 (0) 279 278 (0) 328 328 (0)
Peer Set Comparison
Company Mcap
(Rs bn)
CMP
(Rs/sh) Reco TP
EPS (Rs) P/E (x) EV/EBITDA (x) Core RoCE (%)
FY20E/
CY19P
FY21E/
CY20E
FY22E/
CY21E
FY20E/
CY19P
FY21E/
CY20E
FY22E/
CY21E
FY20E/
CY19P
FY21E/
CY20E
FY22E/
CY21E
FY20E/
CY19P
FY21E/
CY20E
FY22E/
CY21E
HUL 4,357 2,013 REDUCE 1,969 31.7 37.1 41.9 63.5 54.3 48.1 43.5 37.3 33.2 230.7 46.5 28.8
ITC 2,029 166 BUY 221 12.5 11.9 13.0 13.2 13.9 12.7 8.8 10.1 9.0 44.5 43.4 48.0
Nestle 1,684 17,462 REDUCE 14,042 206.0 237.6 278.2 84.8 73.5 62.8 56.4 50.6 44.3 75.0 70.7 69.1
Dabur 779 442 REDUCE 447 9.0 10.0 11.2 49.1 44.1 39.5 39.3 36.4 32.3 51.4 52.7 55.9
Britannia 749 3,115 REDUCE 2,711 56.4 61.9 71.4 55.2 50.3 43.7 40.2 36.2 31.8 41.1 43.4 47.2
GCPL 530 519 REDUCE 529 14.5 15.9 17.6 35.8 32.7 29.5 25.5 24.6 22.7 18.5 20.0 22.1
Marico 386 299 REDUCE 283 8.0 8.4 9.4 37.2 35.4 31.6 26.2 25.0 23.0 41.8 43.2 46.5
United Spirits 367 505 ADD 586 11.9 13.7 16.1 44.1 36.9 31.4 25.3 23.0 20.0 17.9 19.1 20.8
Colgate 362 1,331 ADD 1,372 29.8 32.0 36.1 44.6 41.6 36.8 28.3 26.4 23.6 69.6 72.7 80.5
Jubilant 211 1,597 ADD 1,502 30.1 21.9 37.5 53.0 73.1 42.5 32.2 40.3 25.2 31.4 12.0 22.6
Emami 82 181 REDUCE 221 11.7 11.6 13.0 15.5 15.5 13.9 11.0 11.0 9.8 23.2 24.1 29.9
Radico
Khaitan 40 299 BUY 371 16.1 19.6 23.2 18.5 15.3 12.9 11.2 9.6 8.0 14.9 14.3 15.8
Source: Company, HSIE Research,
Page | 6
11
Nestle India: Results Review 1QCY20
Financials Consolidated Income Statement
(Rs mm) CY15 CY16 CY17 CY18 CY19P CY20E CY21E CY22E
Net Revenues 81,609 91,413 100,096 112,922 123,689 136,033 150,324 166,574
Growth (%) (17.0) 12.0 11.0 12.8 9.5 10.0 10.5 10.8
Material Expenses 34,689 38,828 43,269 45,902 52,239 59,150 64,050 70,036
Employee Expense 9,128 9,016 10,175 11,242 12,604 14,035 15,158 16,370
ASP Expense 5,252 4,996 5,060 7,294 6,927 6,802 7,817 8,662
Distribution Expenses 3,889 4,401 4,773 5,256 5,690 5,985 6,765 7,671
Other expenses 12,123 13,558 14,338 15,630 16,929 17,666 19,812 22,252
EBITDA 16,529 20,615 22,483 27,599 29,301 32,395 36,722 41,583
EBITDA Growth (%) (20.8) 24.7 9.1 22.8 6.2 10.6 13.4 13.2
EBITDA Margin (%) 20.3 22.6 22.5 24.4 23.7 23.8 24.4 25.0
Depreciation 3,473 3,537 3,423 3,357 3,164 3,491 3,640 3,754
EBIT 13,056 17,078 19,060 24,242 26,137 28,904 33,083 37,829
Other Income (Including EO Items) 1,245 1,509 1,769 2,589 2,469 2,506 3,413 4,524
Interest 33 909 919 1,120 1,249 1,063 957 425
PBT 8,137 15,454 18,393 24,291 26,726 30,347 35,540 41,928
Tax 2,504 5,440 6,141 8,221 7,053 7,638 8,945 10,553
Reported PAT 5,633 10,014 12,252 16,070 19,672 22,709 26,594 31,375
Adjustment 4,102 1,238 832 759 186 205 226 251
Adjusted PAT 9,735 11,252 13,083 16,829 19,858 22,913 26,820 31,625
APAT Growth (%) (14.8) 15.6 16.3 28.6 18.0 15.4 17.1 17.9
Adjusted EPS (Rs) 101 117 136 175 206 237.6 278.2 328.0
EPS Growth (%) (14.8) 15.6 16.3 28.6 18.0 15.4 17.1 17.9
Consolidated Balance Sheet
(Rs mm) CY15 CY16 CY17 CY18 CY19P CY20E CY21E CY22E
SOURCES OF FUNDS
Share Capital - Equity 964 964 964 964 964 964 964 964
Reserves 27,214 31,859 33,242 35,773 18,358 25,486 33,306 42,543
Total Shareholders Funds 28,178 32,823 34,206 36,737 19,323 26,450 34,270 43,507
Minority Interest - - - - - - - -
Long Term Debt 9 - - - - - - -
Short Term Debt 168 332 351 351 531 531 531 531
Total Debt 177 332 351 351 531 531 531 531
Net Deferred Taxes 1,729 1,553 1,220 588 180 180 180 180
Long Term Provisions & Others 15,972 19,722 22,916 24,654 29,073 31,974 35,333 39,152
TOTAL SOURCES OF FUNDS 46,057 54,430 58,693 62,331 49,107 59,135 70,314 83,370
APPLICATION OF FUNDS
Net Block 28,979 27,301 26,162 24,006 22,267 21,998 20,161 18,242
CWIP 2,308 1,882 942 1,052 1,433 - - -
Other Non-current Assets 13,249 17,557 19,789 26,585 17,511 20,511 23,511 26,511
Total Non-current Assets 44,536 46,740 46,892 51,643 41,211 42,508 43,671 44,752
Goodwill - - - - - - - -
Inventories 8,208 9,401 9,025 9,656 12,831 12,494 13,654 15,015
Debtors 784 979 890 1,246 1,243 1,371 1,515 1,679
Other Current Assets 2,282 2,185 2,245 2,236 2,217 2,721 3,006 3,331
Cash & Equivalents 4,996 8,800 14,574 16,101 13,081 23,513 33,923 46,399
Total Current Assets 16,269 21,365 26,734 29,238 29,371 40,098 52,099 66,424
Creditors 7,398 7,992 9,846 12,404 14,947 16,798 18,158 19,823
Other Current Liabilities & Provns 7,350 5,683 5,087 6,146 6,528 6,673 7,297 7,984
Total Current Liabilities 14,748 13,674 14,933 18,550 21,475 23,471 25,456 27,807
Net Current Assets 1,521 7,691 11,801 10,688 7,896 16,627 26,643 38,617
TOTAL APPLICATION OF FUNDS 46,057 54,430 58,693 62,331 49,107 59,135 70,314 83,370
Source: Company, HSIE Research
Page | 7
11
Nestle India: Results Review 1QCY20
Consolidated Cash Flow (Rs mn) CY15 CY16 CY17 CY18 CY19P CY20E CY21E CY22E
Reported PBT 8,137 15,454 18,393 24,290 26,750 30,347 35,540 41,928
Non-operating & EO Items - 131 416 (2,477) (2,497) - - -
Interest Expenses 33 (1,474) (1,763) 41 17 1,063 957 425
Depreciation 3,473 3,537 3,423 3,357 3,164 3,217 3,337 3,419
Working Capital Change 715 2,040 3,750 4,128 1,632 1,701 395 501
Tax Paid (2,899) (5,029) (6,041) (8,813) (6,729) (7,638) (8,945) (10,553)
OPERATING CASH FLOW ( a ) 9,459 14,659 18,178 20,525 22,337 28,690 31,283 35,720
Capex (944) (2,070) (1,986) (1,660) (1,545) (1,500) (1,500) (1,500)
Free Cash Flow (FCF) 8,515 12,589 16,192 18,865 20,792 27,190 29,783 34,220
Investments & Acquisition - - - - - - - -
Non-operating Income (4,979) 811 680 1,136 2,375 (99) 359 819
INVESTING CASH FLOW ( b ) (5,923) (1,259) (1,306) (524) 830 (1,599) (1,141) (681)
Debt Issuance/(Repaid) (18) - - - 180 - - -
Interest Expenses (33) (35) (7) (41) (17) (1,063) (957) (425)
FCFE 8,463 12,554 16,186 18,824 20,955 26,127 28,826 33,795
Share Capital Issuance - - - - - - - -
Dividend (4,676) (6,789) (9,980) (13,134) (35,563) (15,581) (18,774) (22,138)
Others (813) 168 20 - - - - -
FINANCING CASH FLOW ( c ) (5,540) (6,656) (9,966) (13,174) (35,400) (16,644) (19,731) (22,563)
NET CASH FLOW (a+b+c) (2,005) 6,744 6,906 6,826 (12,233) 10,447 10,411 12,476
EO Items, Others (2,542) 2,940 1,132 5,413 (9,177) (134) - -
Closing Cash & Equivalents 4,996 8,800 14,574 15,988 12,932 23,513 33,923 46,399
Key Ratios Particulars CY15 CY16 CY17 CY18 CY19P CY20E CY21E CY22E
PROFITABILITY (%)
GPM 57.5 57.5 56.8 59.4 57.8 56.5 57.4 58.0
EBITDA Margin 20.3 22.6 22.5 24.4 23.7 23.8 24.4 25.0
EBIT Margin 17.5 20.3 20.8 23.8 23.1 23.3 24.5 25.6
APAT Margin 11.9 12.3 13.1 14.9 16.1 16.8 17.8 19.0
RoE 34.4 36.9 39.0 47.4 70.8 100.1 88.3 81.3
RoIC (or Core RoCE) 29.0 36.4 42.2 57.9 75.0 70.7 69.1 77.6
RoCE 22.5 24.4 24.8 29.5 37.6 44.0 42.7 41.7
EFFICIENCY
Tax Rate (%) 30.8 35.2 33.4 33.8 25.2 25.2 25.2 25.2
Fixed Asset Turnover (x) 1.6 1.7 1.8 1.9 2.1 2.2 2.4 2.6
Inventory (days) 36.7 37.5 32.9 31.2 37.9 33.5 33.2 32.9
Debtors (days) 3.5 3.9 3.2 4.0 3.7 3.7 3.7 3.7
Other Current Assets (days) 10.2 8.7 8.2 7.2 6.5 7.3 7.3 7.3
Payables (days) 33.1 31.9 35.9 40.1 44.1 45.1 44.1 43.4
Other Current Liab & Provns (days) 32.9 22.7 18.5 19.9 19.3 17.9 17.7 17.5
Cash Conversion Cycle (days) (15.5) (4.4) (10.1) (17.5) (15.3) (18.5) (17.7) (17.1)
Net D/E (x) (0.2) (0.3) (0.4) (0.4) (0.6) (0.9) (1.0) (1.1)
PER SHARE DATA (Rs)
EPS 101.0 116.7 135.7 174.5 206.0 237.6 278.2 328.0
CEPS 137.0 153.4 171.2 209.4 238.8 271.0 312.8 363.5
Dividend 48.5 58.5 86.0 113.0 306.0 161.6 194.7 229.6
Book Value 292.2 340.4 354.8 381.0 200.4 274.3 355.4 451.2
VALUATION
P/E (x) 172.9 149.6 128.7 100.0 84.8 73.5 62.8 53.2
P/BV (x) 59.7 51.3 49.2 45.8 87.1 63.6 49.1 38.7
EV/EBITDA (x) 100.7 80.4 73.4 59.5 56.4 50.6 44.3 38.7
EV/Revenues (x) 20.4 18.1 16.5 14.5 13.4 12.1 10.8 9.7
OCF/EV (%) 0.6 0.9 1.1 1.3 1.4 1.7 1.9 2.2
FCF/EV (%) 0.5 0.7 1.0 1.1 1.2 1.6 1.8 2.0
FCFE/Mkt Cap (%) 0.5 0.7 1.0 1.1 1.2 1.6 1.7 2.0
Dividend Yield (%) 0.3 0.3 0.5 0.6 1.8 0.9 1.1 1.3
Source: Company, HSIE Research
Page | 8
11
Nestle India: Results Review 1QCY20
Rating Criteria
BUY: >+15% return potential
ADD: +5% to +15% return potential
REDUCE: -10% to +5% return potential
SELL: >10% Downside return potential
Date CMP Reco Target
13-Apr-20 16,844 REDUCE 14,042
14-Apr-20 16,610 REDUCE 14,042
13-May-20 17,462 REDUCE 14,042
RECOMMENDATION HISTORY
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
Ma
y-1
9
Jun
-19
Jul-
19
Au
g-1
9
Sep
-19
Oct
-19
No
v-1
9
Dec
-19
Jan
-20
Feb
-20
Ma
r-2
0
Ap
r-2
0
Ma
y-2
0
Nestle TP
Page | 9
11
Nestle India: Results Review 1QCY20
HDFC securities
Institutional Equities
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