Nestle India declared its 4QCY2008 numbers. For the quarter, the company registered robust topline growth of 21.7% y-o-y to Rs1,090 crore (Rs895.7 crore) slightly ahead of our estimate of Rs1,065 crore.
This growth was aided by a strong 25.4% y-o-y growth in net domestic sales even as export sales declined by 10.2%.
Bottomline, on a recurring basis, surged 40.3% y-o-y to Rs124 crore (Rs98 crore) supported by margin expansion, robust topline, higher other income (up 33.8% y-o-y) and lower tax rate (down 206bp y-o-y).
However, on a reported basis, net profit growth was a modest 29.4% owing to sharp 300% increase in provision for contingencies. On the operating front, margins improved by 188bp on the back of price hikes and cost optimization measures initiated by the company.
We recommend a BUY on the stock, with a target price of Rs1,626.
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