Neutral Nestlé India Ltd For Target Rs. 1,300 by Motilal Oswal Financial Services Ltd
* Expect overall sales growth of 5.3% YoY, led by 5% growth in domestic sales and 10% growth in exports. While demand recovery is underway, a higher dependency on urban markets may weigh on NEST volumes.
* We believe the channel destocking due to GST rate cuts might weigh on NEST 2Q performance.
* NEST has been strategically taking pricing action in response to rising commodity prices.
* We expect GP margin contraction of 90bp YoY to 55.7%, impacted by high RM prices (coffee, edible oil). EBITDA margin to contract by 100bp to 22.2%.
* Nestle focuses on expanding its distribution reach, premiumization, and innovations.
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