X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Nestle: The blue chip - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Dec 21, 2001

    Nestle: The blue chip

    Nestle has done well in the last three quarters despite the difficult market conditions. During the nine months of 2001 the company has clocked an 18% growth in topline and an even healthier 33% growth in bottomline. If 2001 was a tough year, imagine what a good year will do to the growth numbers.

    Nestle achieved this with the help of increased sales (new product introductions), lower commodity prices and improved asset rotation which however, were partially offset by the costs associated with water, liquid milk/chilled dairy businesses. The lower provision for contingencies and reduction in income tax rate also contributed to the increase in net profit.

    However, despite the sterling performance, the Nestle management has always been cautious of future growth. During the September quarter results, Nestle India chairman & managing director, Mr Carlo Donati commented and we quote, "The continuing excellent performance of Nestle India reflects the integrity of the Nestle culture. The focus on consumer and the professionalism of our executives has sustained innovation and renovation within the company and their pragmatic attitude has ensured excellent top-line and impressive bottom-line contribution for Nestle India. However despite these strengths, the uncertain and difficult domestic and international market environment coupled with the seasonality factors will impact our performance in the fourth quarter."

    The company faces an uphill task of garnering market share both in bottled water as well as dairy products. Bottled water segment is already littered with numerous high profile players like Bisleri, Pepsi and Coke. In the dairy segment Amul seems way ahead of competition. Britannia too is gearing up its act.

    However, notwithstanding the managementís reservations on growth and the tough road ahead for new businesses, the stock is a true blue chip. During the September quarter, we consolidated the financials of five leading companies in the food-processing sector. The sector showed a growth of 6% in topline and a 22% growth in bottomline. On the other hand, Nestle recorded a 14% topline growth and a 39% net profit growth during the same quarter.

    It is no wonder that Nestle continues to trade at a premium to its peers. While many index heavyweights have seen volatility in valuations, Nestle continues to trade at Rs 500, a P/E of 27x FY02 projected earnings. In the short term, the stock is likely to remain range bound as investors await the companyís success rate in new businesses. Over the longer term however, Nestle is a true blue chip and cannot be avoided while building a portfolio, owing to its management focus and credibility.

     

     

    Equitymaster requests your view! Post a comment on "Nestle: The blue chip". Click here!

      
     

    More Views on News

    Nestle India: Sales Traction From New Products (Quarterly Results Update - Detailed)

    Nov 30, 2016

    Nestle India declared results for the quarter ended September 2016. Here is our analysis of the result.

    Nestle India: Sales Recovery Remains an Issue (Quarterly Results Update - Detailed)

    Oct 7, 2016

    Nestle India declared results for the quarter ended June 2016. Here is our analysis of the result.

    GSK Consumer: On the Recovery Path (Quarterly Results Update - Detailed)

    Jun 20, 2017

    While GSK consumer reported muted revenue growth, volumes are seen to be recovering.

    Apex frozen food Ltd. (IPO)

    Aug 21, 2017

    Should you subscribe to the IPO of Apex Frozen Foods Ltd?

    Nestle: Done Well to Regain its Share (Quarterly Results Update - Detailed)

    Jun 9, 2016

    Nestle announced its results for the quarter ended March 2016. The company's revenues declined by 9% YoY, while profits declined by about 19% YoY during the quarter.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    NESTLE SHARE PRICE


    Aug 22, 2017 (Close)

    TRACK NESTLE

    NESTLE 5-YR ANALYSIS

    Detailed Financial Information With Charts

    COMPARE NESTLE WITH

    MARKET STATS