Earning Optimism, Nestle India share price rises sequentially

Oct 26 2020 02:47 PM
Earning Optimism, Nestle India share price rises sequentially

The share price of Nestle India gained at an intraday high level at Rs. 16,375.00 on Monday after the company reported its earnings for the quarter ended September 2020. The stock price advanced near 3.25 percent intraday high of on the National Stock Exchange (NSE).

At the earning front, Nestle India registered a 1.4 pc decline in September quarter net profit at Rs 587-Cr as against Rs 595.3-Cr on year-on-year basis. However, the net profit rose by 20.7 percent sequentially. Revenue during the quarter advanced 10.1 pc Year on year to Rs 3,541.7-Cr with Indian sales growth at 10.2 pc and export sales growth at 9.4 pc, on Year on year basis.  According to the regulatory filing-statement of the company, it says that Nestle India gets back to 'double-digit' growth, hence the company is committed to investing a further Rs 2,600 -Cr in India over the next three to four years.

With this optimism, some brokerages expressed their views on Nestle stocks. A few of them are as under: Brokerages Jefferies says "We upgrade our CY20-22 Earning Per Share (EPS) estimates by 2-4 pc to factor in this earnings beat. While Nestle remains a strong franchise and rides on the packaged food theme, valuation at 63x CY21 already capture this. Jefferies raised the target price to Rs 17,350 from Rs 16,650 earlier but retained a 'Hold' rating due to stiff valuations.

CLSA largely maintained operating expectations but cut EPS estimates 2-3 pc on lower treasury yield and increased depreciation. It has raised the target price from Rs 16,100 to Rs 17,650, which implies an 11 pc upside potential. CLSA has upgraded the company from 'Sell' to 'Outperform'. Motilal Oswal says In spite of the good results, there is a 3-4 percent reduction in erstwhile EPS forecasts for the next two years. It quoted, “We value the company at 60x Sep’22E EPS to arrive at a target price of Rs 16,440".

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