Nestle India hits fresh all-time high; m-cap nears Rs 1.5 trillion

Shares of Nestle India hit a new all-time high of Rs 15,330 after gaining 3 per cent on the BSE on Thursday amid expectations of another good quarter. The packaged foods company is schedule to announce its October-December quarter (Q4CY19) results on February 13, 2020.

The stock has surpassed its previous high of Rs 15,147, recorded on October 31, 2019. In the past month, Nestle India has outpaced the market by gaining 10 per cent, as compared to 2 per cent rise in the S&P BSE Sensex.

A sharp surge in stock price has seen the company's market capitalisation balloon to near Rs 1.5-trillion mark. Currently, Nestle India stands at 20th position in overall ranking of listed companies with market cap of Rs 1.47 trillion, BSE data shows.

Analysts at ICICI Securities expect Nestle India to report strong year on year (YoY) sales growth of 9.5 per cent, driven by broad based growth across categories and due to lower salience of rural sales. The sales growth is led by robust growth in Maggi and chocolates segment in addition to aggressive new launches and higher advertising spend, analysts said. Despite higher input cost prices (milk & cocoa); the brokerage firm expects operating margins to expand by 95 bps to 21.6 per cent year-on-year (YoY) on a low base of 20.7 per cent.

Brokerage firm KRChoksey Shares and Securities expect Nestle India's revenue to grow 12.1 per cent YoY/ flat QoQ in October-December quarter (Q4CY19) driven by new launches (MILO) and lower exposure to rural sales (Rural market is currently facing slowdown).

“Increase in skimmed milk powder, sugar and cocoa prices likely to add to gross margin pressure. However, we foresee an increase in EBITDA margin due to operational efficiencies undertaken by the company. The net profit margin is expected to increase by 323 bps YoY mainly led by reduction in corporate tax rate,” the brokerage firm said in results preview.

Nestle India paid total interim dividend of Rs 291 per share, including special dividend of Rs 180 per share, during the first nine months (January-September) of calendar year 2019.