Nestle India - Strong performance continues…: EMkay

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Nestle India

Strong performance continues…

ACCUMULATE

CMP: Rs 3,829                                       Target Price: Rs 4,092

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n     Net sales growth at 22.3% yoy to Rs 18.1 bn is in line with our expectations. APAT growth at 33.3% yoy to Rs 2.6 bn is marginally higher than our estimate of Rs 2.5 bn

n     Revenue growth is largely driven by 23.1% yoy growth in the domestic markets and 10.2% yoy increase in exports, as expected

n     Proves its mettle - Better sales mix and lower promotional volumes offsetting higher input cost drives 75 bps expansion in EBITDA margins, a positive surprise

n     No change in earnings – CY11E EPS at Rs 104.1/share and  CY12E EPS at Rs 124.0/share – Maintain ‘ACCUMULATE’ rating with target price of Rs 4,092/share