Accumulate Multibagger Parent Stock Of Nescafe & Maggi For High Return, Rs. 21,334 Target Price: Top Brokerage

Nestle India, a top confectionery and beverages company manufactures famous brands like Nescafe, Maggi, Milkybar, KIT KAT, Bar-One, Milkmaid and Nestea. The company has also introduced products of daily consumption and use such as Nestle Milk, Nestle Slim Milk, Nestle Dahi and Nestle Jeera Raita expanding its brand portfolio. Leading brokerage firm KR Choksey has given an accumulate rating to the stock of Nestle India Ltd. with a target price of Rs. 21,334 a piece.

Stock To Accumulate: Target Price

The Current Market Price (CMP) of Nestle India Ltd. is around Rs. 18,966. KR Choksey has estimated a Target Price for the stock at Rs. 21,334. This stock has the potential to give a 12.5% return, in the upcoming 1 year. It is a large-cap stock with a market capitalization of around Rs. 186,284 crore. It is a multibagger stock with 161.80% return in the last 5 years.

Stock Outlook
Current Market Price (CMP)	Rs. 18,966
Target Price	Rs. 21,334
Potential 1 year return	12.50%
52 week high share price	Rs. 20,200
52 week low share price	Rs. 16,000

Accelerated investment plan

Nestle SA has announced an accelerated investment plan for India where the plan is to invest Rs. 50 bn till 2025. The planned investment is sizeable when compared to Rs. 80 bn invested over the last 60 years. The investment will be for Capex, setting up new plants, acquisitions, and expansion of the product portfolio of the company. Additionally, the company is open to exploring opportunities for mergers and acquisitions. The higher investments will help NEST to accelerate its core business and leverage new opportunities for growth, stated the brokerage firm.

Sustainable growth momentum

Nestle reported sustainable revenue growth in the last 22 quarters, where 17 out of the 22 quarters had double-digit growth, 4 quarters had very high single-digit growth and only 1 quarter, during the pandemic had a growth of 2.6%. In Q2CY22, NEST reported domestic sales growth of 16.4% YoY, contributed by 8.5% YoY pricing growth and 7.9% YoY volume growth. Despite the pressure in overall rural markets in Q2CY22, Nestle saw a strong 30.7% YoY penetration-driven growth in the rural segment on a small base, indicating acceptance for Nestle's products in rural India.

Stock Valuation

Giving a buy rating to KR Choksey said, "We expect Revenue/ EBITDA/ Adj. Net income to grow at a CAGR of 11.2%/ 12.4%/ 12.3%, respectively over CY21-CY24E. The shares are trading at 76.8x/62.5x/54.2x its CY22E/CY23E/CY24E EPS estimates, respectively. We apply P/E of 61.0x on CY24E EPS of Rs. 349.7 and arrive at a target price of Rs. 21,334 per share with an upside potential of 12.5% from the current market price. Accordingly, we maintain our accumulate recommendation on the shares of Nestle India."

Company Portfolio

Nestle India (NEST) is the Indian subsidiary of the Swiss MNC Nestle SA, and its relationship with India dates back to 1912, when it began trading as The NESTLÉ Anglo-Swiss Condensed Milk Company (Export) Limited, importing and selling finished products in the Indian market. NEST has a presence across India. NEST operates in 4 categories- prepared dishes and cooking aids, milk products and nutrition, confectionery, and beverages.

Disclaimer

The above stock was picked from the brokerage report of KR Choksey. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.