For 1QCY20, Nestle India Ltd (NIL) posted healthy set of numbers, exceeding our
expectations on top-line and bottom-line fronts. Revenue grew by ~11% yoy. However, reported operating margins contracted by 121bps yoy. On the bottomline front, NIL reported growth of ~14% yoy to `525cr on the back of healthy
revenue growth and lower taxes.
We forecast Nestle to report healthy top-line CAGR of ~9%
to `14,558cr over CY2019-21E on the back of strong brand, wide distribution
network and new product launches. On the bottom-line front (reported PAT), we
estimate ~10% CAGR to `2,333cr due to strong revenue and gradual improvement
in operating margin. Thus, we maintain BUY on the stock with Target Price of
`19,100.
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