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SENSEX: 38635.32 -1110.34

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Multi Baggers

Hem Securities

12.00 AM Aug 24th 2018

Nestle

BSE ID : 500790     NSE ID : NESTLEIND

RECOMMENDED PRICE 10875.00

PEAK FROM RECO 16839.55 54.85%

CURRENT PRICE 15819.20 45.46%

Nestle India, one the biggest players in FMCG segment, has a presence in milk & nutrition, beverages, prepared dishes & cooking aids & chocolate & confectionery segments. With launch of NESPLUS - a range of nutritious and delicious breakfast cereals for the entire family & Canned beverages - Nescafe RTD , we expect company to acquire strong market share going forward ,Hence looking after strong future prospects of company ,we are recommending ``Buy`` on the stock with price target of Rs 11960 for long term horizon.

Nestl' India, one the biggest players in FMCG segment, has a presence in milk & nutrition, beverages, prepared dishes & cooking aids & chocolate & confectionery segments. Nestl' India manufactures products under internationally famous brand names such as NESCAF', MAGGI, MILKYBAR, KIT KAT, BAR-ONE, MILKMAID and NESTEA and in recent years the Company has also introduced products of daily consumption and use such as NESTL' Milk, NESTL' SLIM Milk, NESTL' Dahi and NESTL' Jeera-Raita. Nestle has created brands like Nestl' Milkmaid, Nestl' Everyday, Maggi Noodles, Maggi Soups, Polo, Kit Kat, Nescafe & many more.

Strong financial Performance: Company’s bottomline has jumped by almost 50% in Q2CY18 at Rs 395 Cr as against Rs 263 Cr in Q2CY17.Co’s operating profit has shown rise of almost 40% at 645 Cr in Q2CY18 as against Rs 462 Cr inQ2CY17. Co’s operating profit & net profit margin has shown surge of more than 25% in Q2CY18 thus reflecting sound financial health. Co`s brand Kitkat, Nescafe & Maggi has shown strong growth. Company has introduced a special limited edition range of noodle variants inspired by regional cuisines and spices called ``MAGGI Masalas of India`` in markets across India. It was launched innovatively through Google Search and PayTM. It was the first time that any brand introduced Google ‘Search’ in the pre-launch phase.

New Product Launch: Company has launched NESPLUS - a range of nutritious and delicious breakfast cereals for the entire family. Company has added Nestlé Breakfast Cereals from Cereal Partners Worldwide (CPW) to its existing portfolio this year. The new range of NESPLUS breakfast cereals comes with four multigrain variants – Kokos, Choco- Burst Fillows, Strawberry-Burst Fillows and Nutty Honey Granola. Each of these is a combination of four grains - wheat, rice, oats and the traditional Indian millet, jowar. This combination of grains along with unique flavors has been specially created for the Indian palate. With this launch, Nestlé India aims to provide high quality nutritious breakfast options for the Indian consumers in line with its vision to introduce products ingrained in nutrition, wellness and health.   

The company is currently trading at 71.13 of TTM eps of Rs 152.89 while it is trading at 67x of FY19E eps & 61x of FY20E eps. In H1CY18, company has seen strong growth in its financials. With launch of NESPLUS - a range of nutritious and delicious breakfast cereals for the entire family & canned beverages - Nescafe RTD, we expect company to acquire strong market share going forward, Hence looking after strong future prospects of company, we are recommending “Buy” on the stock with price target of Rs 11960 for long term horizon.

For more details click on the attachment..

Disclaimer & Disclosure: This document is prepared for our clients only, on the basis of publicly available information and other sources believed to be reliable. Whilst we are not soliciting any action based on this information, all care has been taken to ensure that the facts are accurate, fair and reasonable. This information is not intended as an offer or solicitation for the purchase or sell of any financial instrument and at any point should not be considered as an investment advice. Reader is requested to rely on his own decision and may take independent professional advice before investing. Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited, Directors and any of its employees shall not be responsible for the content. The person accessing this information specifically agrees to exempt Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and further agrees to hold Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The companies and its affiliates, officers, directors, and employees, including persons involved in the preparation or issuance of this material may from time to time, have long or short positions in, and buy or sell the securities there of, company (ies) mentioned herein and the same have acted upon or used the information prior to, or immediately following the publication.

Nestle_Hem.pdf

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