Nestle expected to post 18% jump in Net profit: Motilal Oswal

NestleMotilal Oswal Financial Services, one of India's leading stockbroking and research firm, has come out with earnings estimates on FMCG sector for the quarter ended March 2009.

The company in its latest research report revealed that Nestle's March quarter sales are expected to go up by 18.7% to Rs 1295.4 crore on Y-o-Y basis.

In addition, Motilal Oswal predicated Nestle's net profit to go up by 18.5% to Rs 201.5 crore on Y-o-Y basis.

Nestle India Limited (NIL) manufactures products in different categories including milk and milk based products, beverages, prepared dishes, chocolates & confectionery & baby foods. The company manufactures products of truly International quality under brand names such as milkmaid, everyday, cerelac, lactogen, maggi, nescafe, nescafe sunrise, nestea, milo, kitkat, milky bar, munch, polo, nestle milk, nestle dahi, nestle "fruit n milk" and nestle "fruit n dahi".

Apart from latest products, the company is continuously increasing its efforts to understand the changing lifestyles of modern India and looks forward to consumer needs in order to provide convenience, nutrition and wellness through its products.

It may be noted that company has posted robust top line growth of 20% + continues for 8th consecutive quarter. The company's net sales for the Dec08 Qtr grew by 21.7% y-o-y to Rs. 1,090 crore.

Sunil Upadhay, technical analyst, revealed that NIL's turnover & volumes have remained on a good growth trajectory driven by the structural changes undertaken by NIL over the past couple of years namely realignment of internal company structure as multi-focused business structure and reorganization of sales force.

In addition, strong growth in food categories such as Noodles & Chocolates has also assisted NIL grows faster than the overall FMCG industry, he added.    

Along with Sunil Upadhay, many other marketing analysts also agreed with the idea that NIL's long-term growth potential remains intact also in coming years, by considering facts viz. its reputed brand image with consistent product launches, improved distribution network & aggressive price point strategy.

However, looking at the current global environment concerns, they (market analysts) feel that NIL's volume growth could be affected over the next few quarters due to demand slowdown.

Last month, Nestle India has declared a final dividend of Rs 12.00 per share, making the total dividend for the full year at Rs 42.50 per share.

As per latest figures, the dividend yield ratio comes to 2.99%, making it attractive for investors in the current market scenario. It may be noted that Nestle India has been a steady player in terms of dividend.

After considering various stock recommendation calls as well as technical calls from leading stock analysts, one thing is sure that Nestle India continues to be one of the best performers in the FMCG space in the midst of global slowdown in the economy and financial crisis. In addition, the stock is also capable in achieving new record highs in coming years. (via