Nestle India stock hit a record high of Rs 11,777 on Thursday in anticipation of strong earnings growth for the year ended December 2018 riding on the back of market share gains. The third largest consumer staples company by market capitalisation will announce its December quarter results on February 14.
Nestle is winning back market share in its core categories on the back of increasing focus on distribution, product launches and strong media campaigns and is the most preferred stock in the sector, analysts said.
Nestle stock gained 65 per cent in the last one year to close at Rs 11,670.05 on Thursday, up 0.62 per cent. BSE FMCG index rose just 11 per cent in the same period. The stock is trading at 47 times FY20 estimated earnings, in line with Hindustan Unilever and at a 10 per cent premium to the sector. However, analysts expect this premium valuation to sustain on strong earnings and return on equity ratio.
“Nestle has superior return ratios and deserves a premium for its diversified product portfolio and access to brands and technology from the parent firm,” said Amit Sinha, analyst, Macquarie Securities India. “We are impressed by volume growth turnaround and expect strong growth to continue”.
Nestle remains the most preferred pick in consumer goods with 28 of the 38 analysts tracking the stock have a ‘buy’ rating.
Source: ETRetail
