Nestle India shares are in focus on Friday, a day after the FMCG major reported its financial results for the December quarter. The Nestle stock dropped as much as 2.8 percent to Rs 17,582.2 on BSE before recovering most of those losses.
At 9:20 am, the stock was down 0.8 percent at Rs 17,947.8.
During market hours on Thursday, Nestle India posted a net profit of Rs 386.6 crore for the October-December period, down 20 percent on a year-on-year basis, despite an 8.9 percent increase in revenue to Rs 3,739.3 crore.
Analysts in a CNBC-TV18 poll had estimated the company's net profit for the quarter ended December at Rs 545 crore and revenue at Rs 3,800 crore.
Nestle India's board declared a dividend of Rs 65 per share. The food and beverages company said its domestic sales growth was largely driven by volume and mix.
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Nestle India reported Rs 865.7 crore in earnings before interest, taxes, depreciation and ammortisation (EBITDA), up 11.4 percent on-year. Its EBITDA margin improved to 23.1 percent in the December quarter from 22.6 percent in the year-ago period.
Analysts had estimated the company's EBITDA at Rs 850 crore and EBITDA margin at 22.4 percent.
What should investors do with Nestle India shares now? Here's what brokerages say
Nomura
The brokerage reaffirmed its 'buy' rating on Nestle India and raised its target price to Rs 21,150 from Rs 20,750. Steady growth of the company, which sees price hikes as a last resort, in uncertain times is a virtue, according to Nomura.
The brokerage expects Nestle to maintain double-digit sales growth over the medium term and sees margins improving sequentially for the company aided by price hikes and its cost-efficiency programme.
Morgan Stanley
The brokerage has an 'underweight' call on Nestle with a target price of Rs 15,712. Nestle's Q4 results were ahead of estimates on a better margin but weaker growth in its largest category and margin pressure from inflation are headwinds, according to Morgan Stanley.
Credit Suisse
The brokerage has a ‘neutral’ call on Nestle India with a target price of Rs 20,000. The company’s volume growth is healthy and margin pressure relatively lower, but its valuation looks stretched, according to Credit Suisse.
ICICI Securities
The brokerage upgraded Nestle India to ‘add’ and raised its target price to Rs 20,000 from Rs 19,500. Its domestic revenue growth, though steady, is slightly unexciting, according to ICICI Securities.
Nestle India reported a good performance in most of its businesses, expect the infant nutrition segment, which is slightly weak, according to the brokerage.
The company is benefitting from improved product availability and expansion, but some near-term challenges are expected due to raw material inflation, it added.
CLSA
The brokerage has retained its ‘sell’ rating on Nestle with a target price of Rs 17,370. Urban salience aided the company’s topline and the rural business saw high single-digit growth, but margin pressure continues, according to CLSA.
Jefferies
The brokerage has maintained a ‘hold’ call on Nestle India but lowered its target price to Rs 18,600 from Rs 18,800. The company’s Q4 performance was better than expected especially on the margin front, but the input price environment remains tough, according to Jefferies.
(Edited by : Sandeep Singh)
First Published: Feb 18, 2022 9:25 AM IST
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