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Mr. Antonio Helio Waszyk, Chairman and MD, Nestle India (Nestle), has said that
growth in India is on track and the company can sell more, but for capacity
constraints. Nestle has chalked out ~ INR 18 bn investment plan over the next twothree
years and also on the anvil is second Research and Development (R&D) centre.
Capacity expansion details
Karnataka: Investment of INR 3.60 bn for noodles to expand capacity by ~20%.
Goa: Investment of INR 5 bn for expansion in confectionery until Q2CY12.
Himachal Pradesh: This unit (ninth manufacturing facility) will manufacture
chocolates and noodles. INR 4-5 bn will be invested in the facility until Q2CY12.
Haryana: Investment of INR 6 bn for the green field facility by CY11 end.
Punjab: Investment of INR 2 bn by end CY11 for manufacturing chocolates.
One more R&D facility: Nestle is constructing a new (R&D) unit in Karnataka at an
investment of USD 50 mn. Apart from this, the company is spending INR 2 bn on a
R&D centre at Manesar which will employ 100 people. India is one of the few
emerging countries where Nestle has a R&D centre.
New products: Four new products planned under coffee segment in winter 2011
and new products in popular foods category also planned.
Raw material inflation: Nestle is planning to introduce a new manufacturing
technology to increase yield of coffee berry. It will introduce a range of value-added
products and command high pricing power. EBIDTA margin jumped 286bps Y-o-Y to
19.7% in Q4CY10 as predicted by us in our Q3CY10 result update, Nestle: Sales
rebound; margins likely to follow suit, dated November 1, 2010.
Our view: We are enthused by Nestlé’s plan for higher capex to meet the growing
demand for its products and launch new products. We believe Nestle is the best play
on packaged foods from a longer term perspective. Nestle has posted buoyant sales
growth consistently in spite of high food inflation and we believe this momentum will
continue in the coming quarters with increased focus on new product launches.
Although coffee prices have spiked up recently, Nestle has demonstrated high pricing
power, which will continue. We maintain ‘HOLD/Sector Underperformer’.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Mr. Antonio Helio Waszyk, Chairman and MD, Nestle India (Nestle), has said that
growth in India is on track and the company can sell more, but for capacity
constraints. Nestle has chalked out ~ INR 18 bn investment plan over the next twothree
years and also on the anvil is second Research and Development (R&D) centre.
Capacity expansion details
Karnataka: Investment of INR 3.60 bn for noodles to expand capacity by ~20%.
Goa: Investment of INR 5 bn for expansion in confectionery until Q2CY12.
Himachal Pradesh: This unit (ninth manufacturing facility) will manufacture
chocolates and noodles. INR 4-5 bn will be invested in the facility until Q2CY12.
Haryana: Investment of INR 6 bn for the green field facility by CY11 end.
Punjab: Investment of INR 2 bn by end CY11 for manufacturing chocolates.
One more R&D facility: Nestle is constructing a new (R&D) unit in Karnataka at an
investment of USD 50 mn. Apart from this, the company is spending INR 2 bn on a
R&D centre at Manesar which will employ 100 people. India is one of the few
emerging countries where Nestle has a R&D centre.
New products: Four new products planned under coffee segment in winter 2011
and new products in popular foods category also planned.
Raw material inflation: Nestle is planning to introduce a new manufacturing
technology to increase yield of coffee berry. It will introduce a range of value-added
products and command high pricing power. EBIDTA margin jumped 286bps Y-o-Y to
19.7% in Q4CY10 as predicted by us in our Q3CY10 result update, Nestle: Sales
rebound; margins likely to follow suit, dated November 1, 2010.
Our view: We are enthused by Nestlé’s plan for higher capex to meet the growing
demand for its products and launch new products. We believe Nestle is the best play
on packaged foods from a longer term perspective. Nestle has posted buoyant sales
growth consistently in spite of high food inflation and we believe this momentum will
continue in the coming quarters with increased focus on new product launches.
Although coffee prices have spiked up recently, Nestle has demonstrated high pricing
power, which will continue. We maintain ‘HOLD/Sector Underperformer’.
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