Nestle India's performance in the third quarter of CY23 demonstrated strong domestic sales growth, offset by a decline in export sales, according to a research report by KR Choksey. The company's revenue saw an increase of 9.5% year-on-year (YoY) and 8.1% quarter-on-quarter (QoQ) to ₹50,368 million ($673 million), with a notable 14.9% YoY rise for the first nine months of CY23 to ₹1,45,259 million ($1.94 billion).
The report pointed out that domestic sales grew by 10.3% YoY and 9.1% QoQ, providing a stark contrast to export sales which dropped by 9.6% YoY and 6.5% QoQ. Earnings before interest, tax, depreciation, and amortization (EBITDA) for the quarter amounted to ₹12,280 million ($164 million), marking a growth of 22.3% YoY and 16.3% QoQ.
The company's profit after tax (PAT) was reported at ₹9,081 million ($121 million), indicating a substantial growth of 37.3% YoY and 30.0% QoQ. The report also highlighted an exceptional item in Q3CY23 related to an indirect tax matter that was settled with the state government.
KR Choksey maintained an "Accumulate" recommendation on Nestle India shares with a target price of ₹26,111 per share ($349), which represents a price-to-earnings (P/E) ratio of 63.0x. This target price suggests an upside potential of approximately 8.5%. The firm based its recommendation on expected adjusted PAT growth and a CY25E earnings per share (EPS) of ₹414.5 ($5.54).
InvestingPro Insights
In light of the recent performance of Nestle India, InvestingPro provides some valuable insights that may interest potential investors. According to InvestingPro data, Nestle India is a prominent player in the Food Products industry, known for consistently increasing its earnings per share and maintaining dividend payments for 23 consecutive years. These factors contribute to the company's strong return over the last five years, which is an encouraging sign for investors.
In addition, InvestingPro Tips highlight that Nestle India trades at a high earnings multiple and a high P/E ratio relative to near-term earnings growth. This is in line with the report by KR Choksey, which suggests a P/E ratio of 63.0x for the company.
Furthermore, the company's cash flows can sufficiently cover interest payments, which could be a reassuring factor for investors considering the company's moderate level of debt.
In total, InvestingPro offers over 21 additional tips and data points for Nestle India, making it a valuable resource for those looking to make informed investment decisions.
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