Nestle India Share: What should investors do with the FMCG major’s stock after Q4?

“After an industry-leading growth for several quarters that also saw margin pressure, 4Q saw a reversal in trends. Volume growth fell to a multi-quarter low at a time when margins climbed well. management. Volume reduction in part due to price hike in Maggi LUP (Rs 5 to Rs 7) – This also resulted in share loss as competition stuck to the current price point. LT appears upbeat as to outlook shelter intends to invest 50 billion on capex,” said global brokerage Jefferies.

The management believes that the share loss due to LUP price hike is temporary and should normalize in the medium term. focus on expanding rural delivery; Innovation should also pick up pace after the reduction caused by Kovid. On the margin side, while edible oil and packaging inputs improved, other inputs remained elevated. However, Mgmt. He believes margins have bottomed out, while the brokerage house has a hold rating fmcg stock with a target value of 18,100.

“Nestle’s penetration-based volume growth strategy is paying off. We expect the company to maintain its growth momentum by continuing investments in innovation and premiumisation, expanding its direct reach with a focus on rural markets, and entering new categories. The stock is trading at 65.8x/57.5x CY23E/CY24E EPS. We assume coverage with buy and value the stock at 67x CY24E EPS, which translates into a target price of 22,860,” BOBCaps said.

Its gross profit margin contracted by 200 bps YoY in Q4CY22 but expanded by 220bps QoQ sequentially, even as prices of key commodities such as cereals, grains and coffee remained at 10-year highs.

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