Nestle India shares: What should investors do with FMCG major stock post Q4 results

During the fourth quarter that concluded on December 31, 2022, FMCG giant Nestle India Ltd. announced a net profit growth of more than 65%, coming in at 628 crore. The business, which uses a January-December fiscal year, reported a net profit of 379 crores over the same time frame the previous year. "Following several quarters of dominating the industry in growth while simultaneously experiencing margin pressure, 4Q saw a change in direction. At the same time as volume growth slowed to a multi-quarter low, margins swiftly increased. The price increase for Maggi LUP (from Rs. 5 to Rs. 7) was partly blamed by management for the volume slowdown; nevertheless, the competition continued to sell at the previous price, which led to share losses. Nestle plans to invest $50 billion in capital expenditures, thus the long-term picture seems positive "the worldwide Jefferies brokerage. The management thinks that short-term share losses brought on by the LUP price increase will eventually return to normal. The emphasis is still on expanding rural distribution, and after experiencing a slowdown because to COVID, innovation should resume. While packaging and edible oil inputs have corrected, other inputs continue to be excessive. With a target price of 18,100, the brokerage firm maintains a Hold recommendation on the FMCG company, but management still feels that margins have bottomed out.Results are being produced through Nestle's penetration-led volume growth strategy. With sustained investments in innovation and premiumization, an increase in direct reach with an emphasis on rural areas, and ventures into fresh categories, we anticipate the firm to maintain its growth pace. CY23E/CY24E EPS are being valued at 65.8/57.5x for the company. The stock is valued at 67x CY24E EPS and has a target price of $22,860, according to BOBCaps, who also assume coverage with a buy recommendation on the company. Despite the fact that the prices of important commodities like cereals, grains, and coffee are still at a 10-year high, its gross profit margin decreased by 200 bps YoY in Q4CY22 but increased sequentially by 220 bps QoQ.