Nestlé India (NESIND) 6600

Transcription

1 Result Update Rating matrix Rating : Buy Target : 742 Target Period : 12- months Potential Upside : 12% What s changed? Target Unchanged EPS CY17E Changed from to EPS CY18E Unchnaged Rating Unchanged Quarterly performance Q1CY17 Q1CY16 YoY (%) Q4CY16 QoQ (%) Sales EBITDA EBITDA % bps bps PAT Key financials Crore CY CY16 CY17E CY18E Net Sales 8, ,49.6 1, ,95.4 EBITDA 1, ,19.7 2, ,531.5 Net Profit ,1.4 1, ,489.8 EPS ( ) Valuation summary CY CY16 CY17E CY18E P/E Target P/E Div. Yield Mcap/Sales EV/EBITDA RoNW (%) RoCE (%) * CY16 onwards numbers are as per IND-AS Stock data Particular Amount Market Capitalization ( Crore) 6383 Total Debt (CY16) ( Crore) 33.2 Cash & Investments (CY16) ( Crore) 2,5. EV ( Crore) 61, week H/L 739 / 549 Equity capital 96.4 crore Face value 1 Price performance 1M 3M 6M 12M Nestle India HUL ITC GSK Consumer Research Analyst Sanjay Manyal sanjay.manyal@icicisecurities.com Tejashwini Kumari tejashwini.kumari@icicisecurities.com Volume traction to drive growth May, 217 Nestlé India (NESIND) 66 Nestlé India (NIL) reported a healthy set of numbers with revenue inline with estimates. The company has adopted Ind-As from January 1, 217. Hence, our estimates are not comparable for line items. Sales for the quarter was up 9.1% YoY to crore (I-direct estimate: crore) led by 9.7% domestic sales growth. The company reported volume growth across categories and has benefited from the price hike taken in previous quarters Raw material cost as a percentage of net sales has increased 3 bps YoY on account of a rise in input cost, especially milk. Additionally, other expense as a percentage of net sales has increased 174 bps YoY on account of high energy cost and increased advertisement expense towards brand building exercises. Thus, it reported 288 bps YoY contraction in the operating margin to 2.3% (estimate: 19.%) NIL enjoyed lower tax for the quarter on account of higher tax holiday benefits. Thus, reported profit for the quarter came in at 36.8 crore, up 6.8% against our estimate of crore Prepared dishes regaining their strong position in sales The prepared dishes segment, which accounted for ~3% of NIL's sales prior to the noodles ban was dominated by Maggi noodles (we believe ~75% of the segment s revenue was contributed by Maggi). Hence, post that, revenue from prepared dishes dipped to crore in CY, contributing.6% to the sales. However, in order to re-build the core and get back its position, brand Maggi unleashed a slew of innovations in noodles and other related categories in CY16 and successfully gained 6% market share (pre-ban it was ~75%). The segment, thus, contributed 24.2% to gross sales clocking revenue growth of 74.9% to crore in CY16. Growth was led by 73.% volume growth and 1.1% realisation growth. We believe that with strong comeback of Maggi and various variant launches under the brand, revenues from prepared dishes will grow at a CAGR of 18.% in CY16-18E to crore with volumes nearing Maggi pre-ban levels. Volume traction to drive growth amid high competition across categories NIL is the market leader in instant noodles and baby food products in India and No. 2 player in the instant coffee and chocolates segment. The company enjoys high brand equity in its leading segments and has grown on the back of price hikes in past four years. Amid intense competition across segments, the company has hardly clocked any volume growth over the same period. Post the Maggi fiasco, the situation worsened. However, understanding the need of the hour, NIL launched more than 3 products in CY16 across its segments, including new launches as well as variants. We, thus, remain upbeat on the company s prospect given the aggression in product launches and marketing initiatives. NIL is also keen on bringing few global brands to India, which may provide further thrust. We are factoring in 1.9% and 9.2% volume growth for CY17E & CY18E, respectively, remaining marginal improvement on realisation front. Reiterate BUY recommendation; new launches to provide boost We are estimating 13.3% CAGR in the revenue over CY16-18E factoring in CAGR of 1.1% for blended volumes. Given the competitive environment across categories, we are factoring in 2.% and 3.1% realisation growth for the same period. PAT is estimated to grow at a CAGR of 22.% over CY16-18E. We remain positive on the growth outlook and reiterate our Buy recommendation on the stock with target price of 742/share. ICICI Securities Ltd Retail Equity Research

2 Variance analysis Q1CY17 Q1CY17E Q1CY16 YoY (%) Q4CY16 QoQ (%) Net Sales 2, , , , Growth largely volume based across categories; domestic sales clock 9.7% YoY growth Operating Income Raw Material Expenses 1,93.9 1, Raw material cost increased 3 bps YoY on account of rise in input cost, especially milk Employee Expenses Other operating Expenses Elevated overhead expenditure on account of higher advertisement expense and fuel cost EBITDA Led by higher espenses, EBITDA declined 4.1% YoY EBITDA Margin (%) bps bps Depreciation Interest On account of Ind-AS adoption, there is a difference in interest cost reporting Other Income PBT Exceptional Items Tax Outgo Lower tax rate for the quarter on account of higher tax holiday benefits PAT Reported PAT grew 6.8% YoY led higher other income and lower tax outgo Adj. PAT Change in estimates CY17E CY18E ( Crore) Old New % Change Old New % Change Comments Sales Revised revenue numbers marginally upwards on account of reported volume growth and aggressive product launches EBITDA 2,77.8 2, , , EBITDA Margin(%) bps bps PAT EPS ( ) Assumptions Current Earlier CY14 CY CY16 CY17E CY18E CY17E CY18E Gross Sales ( crore) Milk Product and Nutrition 4, , , , ,5.4 5, ,12.4 Beverages 1, ,336. 1, ,4.5 1, , ,69.2 Prepared dishes 2, , , ,723. 3,22.3 2, ,994.8 Chocolate & confectionery 1, ,11.9 1, , , , ,428.3 Volume Growth (%) Overall Volume Growth Volumes tweaked based on CY16 reported numbers Milk Product and Nutrition Beverages Prepared dishes Chocolate & confectionery ICICI Securities Ltd Retail Equity Research Page 2

3 Company Analysis Volume traction to drive growth amid high competition across categories NIL is the market leader in instant noodles and baby food products in India and No. 2 player in the instant coffee and chocolates segment. The company enjoys high brand equity in its leading segments and has grown on the back of price hikes in the past four years. Amid intense competition across segments, the company has hardly clocked any volume growth over the same period. Post the Maggi fiasco, the situation worsened. However, understanding the need of the hour, NIL launched more than 3 products in CY16 across segments, which included new launches as well as variants. Further, it plans to enter five new categories viz. Nespresso (a coffee machine), Dolce Gusto (coffee capsule system), petcare, healthcare & skincare. We believe its aggressive step towards a slew of new launches supported by higher advertisement expense for proper communication would set a strong platform for the company s growth with a balanced portfolio. Thus, we remain upbeat on the company s prospect and factoring in 1.9% and 9.2% volume growth for CY17e and CY18E, respectively, remaining muted on the realisation front due to intense competition at 2.% and 3.1% over the same period. Thus, we expect revenue to grow at 13.3% CAGR over CY16-18E. Exhibit 1: Revenues to grow at CAGR of 13.3% over CY16-18E CY Net Sales ( crore) - LHS Net Sales Growth (%) - RHS Exhibit 2: Volume to gain traction with new launches and aggressive communication CY1 Volume Growth (%) Price Growth (%) ICICI Securities Ltd Retail Equity Research Page 3

4 Milk products & nutrition focus on nutrition and value addition The Milk products & nutrition segment is the largest contributor to NIL s revenues at 49.7% of gross revenues for CY16. Segment sales grew marginally by.9% for the year at crore. The category volumes continued to decline for a fifth year in a row. It posted a decline of 1.5% for CY. However, the company is now focussing on the value-added segment in the dairy segment. It launched premium yoghurt under the brand name of Nestlé a+ Grekyo in several variants as a brand extension of Nestlé a+ range. It also launched Everyday Masala Fusion Dairy Whitener with six natural spice flavours, Nescafé ready-to-drink (RTDs) in three flavours. It also extended the nutrition products from infants to toddlers by introducing Ceregrow for children between the age group of two and five years. Additionally, it renovated the entire Cerelac range by fortifying it with iron to enhance the nutritional aspects. Additionally, it launched the protein rich milk Nestlé a+ Pro-Grow. Going ahead, we expect the overall category growth to be a mix of volume CAGR of 7.5% and realisation CAGR of 5.% supported by the new launches for CY17E & CY18E. We estimate revenues from milk products & nutrition will grow at 12.9% CAGR over CY16-18E. Exhibit 3: Revenue to grow at 12.9% CAGR over CY16-18E Exhibit 4: Revenue growth to be mix of volume & realisation growth Revenues ( crore) - LHS Revenue Growth (%) - RHS Volume growth (%) Realisation growth(%) Beverages Focus on differentiated products to aid segment growth The beverages segment faced intense competition and, hence, posted 3.1% revenue decline. Though the segment volume increased 1.3%, realisation declined 4.3%. We believe the average realisation drop was on account of high promotional offers. As per industry data, Nescafe s market share has declined from 6.1% in CY13 to 55.5% in CY. This is largely on account of intense competition from Bru (HUL s brand). The company is now focussing on launching differentiated products as a part of the growth strategy and has come up with products like Nescafé Sunrise Insta-Filter. It also launched variants for Nestea Iced Tea and Nescafé Latté. Further, the company is planning to bring global brands like Nespresso (a coffee machine) and Dolce Gusto (coffee capsule system) in Indian market, which will further be a booster for the segment. We expect the beverages segment to see volume growth of 5.% (CAGR CY16-18E) & price CAGR of 3.5% over the same period. The segment revenue, thus, is expected to grow at a CAGR of 8.7% over CY16-18E. ICICI Securities Ltd Retail Equity Research Page 4

5 Exhibit 5: Beverages revenue growth expected at 8.7% CAGR Exhibit 6: Volume growth expected to be in focus in near term Revenues ( crore) - LHS Revenue Growth (%) - RHS Volume growth (%) Realisation growth(%) Prepared dishes Rebuilding, reinvigorating portfolio Prepared dishes & cooking aid segment which includes revenue from instant noodles, pasta, cooking aids, soups and sauces, reached ~7% of its pre-maggi fiasco level in volume terms. The segment witnessed revenue growth of 74.9% to crore led by 73.% volume growth and 1.1% realisation growth. It contributed 24.2% to the total gross revenue against.6% in CY16 (29.2% in CY14). In order to re-build the core back and get back its position, brand Maggi unleashed a slew of innovations in noodles and other related categories in CY16. It launched Maggi Hot Heads, Maggi No Onion No Garlic Masala, Hot heads cuppa noodles and re-launched Maggi Cuppa Masala and Maggi Cuppa Chilly Chow. It also forayed into the soup market with New Maggi Cup-a-licious soups in six different flavours. Further, it expanded its sauces range by launching the Maggi Masala Sauce. Additionally, apart from the thematic advertising, brand Maggi also put immense focus behind small town and rural areas via sampling and vernacular media engagements. Through all these launches, innovations and advertisements, Maggi strengthened its market share of 6% (preban 75%) and came back to No.25 position in the Brand Equity s Most Trusted Brand Survey for 216 (had slipped to 95th rank in 2). Hence, along with maintaining its strength of premium product offerings to consumers, we expect revenues from prepared dishes to grow at a CAGR of 18.% in CY16-18E to crore with volumes nearing Maggi pre-ban levels. Exhibit 7: Prepared dishes revenues to grow to pre Maggi fiasco level Exhibit 8: Recall impacts prepared dishes segment in CY Revenues ( crore) - LHS Revenue Growth (%) - RHS Volumes growth (%) Realisation growth(%) ICICI Securities Ltd Retail Equity Research Page 5

6 Chocolate and confectionery Focus on premium products NIL s chocolate & confectionery segment (12.5% of gross revenues CY16) includes strong brands as KitKat, Munch, Milky Bar, Bar One and Polo. Post the volume decline for the past five years in a row, the chocolate and confectionery segment registered volume growth of 7.7% leading to revenue growth of 6.6%. Realisation declined 1.% during the year. The segment focused on the key brands and high growth premium segments. It launched KitKat Duo and Nestlé Munch Trio and re-launched the flagship premium brand Alpino. With increasing marketing initiatives and new launches, we believe volume growth should gain traction over time. We estimate the volume for the segment will grow at 5.% CAGR in CY16-18E. Hence, the revenue from the segment is expected to grow at 7.1% CAGR in the same period. Exhibit 9: Sales to gain traction, going forward Exhibit 1: Revival in volume growth to support category Revenues ( crore) - LHS Revenue Growth (%) - RHS Volumes growth (%) Realisation growth(%) ICICI Securities Ltd Retail Equity Research Page 6

7 Operating margin to remain capped in near term NIL s margins remained healthy at ~2% until CY1 with strong volume growth of ~16% and moderate price hikes of ~4%. However, during CY11-14, higher price hikes at ~1% pushed margins to ~22%. Further, the Maggi noodles recall led to lower net sales for the company, impacting margins adversely. Going ahead, though we expect traction in volumes, the company s ability to take significant price hike is expected to remain capped amid intense competition. Thus, we are factoring in operating margin of 2.5% and 2.8% for CY17E and CY18E, respectively considering higher raw material cost and marginal realisation growth. Exhibit 11: EBITDA margin (%) trend (%) Profit to grow strongly at CAGR of 18.1% over CY16-18E PAT growth remained healthy at 23.5% CAGR in CY7-11 following healthy revenue growth and sustained higher margins. However, PAT growth moderated thereafter, until CY13, following the slowdown in revenue growth and increase in interest cost & depreciation impacting earnings. The increase in interest and depreciation during the period was following the aggressive capex of ~ 3 crore to double its existing capacity. The company repaid its debt completely in July 214. However, NIL realised cumulative exceptional loss of 5.8 crore in CY arising out of costs incurred by the company due to the nationwide recall of Maggi noodles. This adversely affected the earnings at crore in CY against crore in CY14. Post re-launch of Maggi, the company reported 11.4 crore profit for CY16. We expect it to clock profit CAGR of 22.% in CY16-18E to crore. Exhibit 12: PAT growth trend CY Net Profit ( crore) PAT Growth (%) ICICI Securities Ltd Retail Equity Research Page 7

8 Outlook & valuation With a population of ~12 crore, India is one of the largest consumer markets in the world. The categories in which NIL operates have comparatively lower penetration in India (instant noodles, packaged milk, chocolates) when compared to the economies of other countries. Further, with penetration even in urban India being low, rural India has further lower penetration, thereby providing huge scope of growth for the company. Maggi made a strong comeback in the market (with market share of 6% by the end of CY16). There were aggressive launches of more than 3 products across segments in CY16 with focus on balanced portfolio supported by strong communication to gain traction in volume across segments. In conjunction with this, since Nestlé maintained its strength of premium product offerings to consumers, we believe NIL would be able to clock higher volume growth along with concomitant growth on earnings front. We remain positive on the company s future prospects given its thrust on a) creating a balanced portfolio through new launches and planned entry in new categories, b) aggressive communication strategies and c) expanding the reach. Rapid urbanisation and increasing participation of women in decision making is a huge opportunity for the company given the nature of its product portfolio. The company is gearing up to tap the same with the new launches with the proposition of convenience, nutrition and on-the-go usage. Thus, we believe the stock would continue to trade at a premium multiple as it has commanded in the past. We have modelled net sales CAGR of 13.3% in CY16-18E and earnings CAGR of 22.% for NIL during the same period. We remain positive on the growth outlook and reiterate our BUY recommendation on the stock with a target price of 742/share valuing it at an earning multiple of 48x for CY18E. Exhibit 13: Valuations Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE ( cr) (%) ( ) (%) (x) (x) (%) (%) CY CY17E CY18E ICICI Securities Ltd Retail Equity Research Page 8

9 Annual Report highlights The company s focus in CY16 was on restoring stability in operations ensuring double-digit growth. It also prioritised digital engagement and enhanced media responsiveness Domestic sales for the company grew 13.5%. Exports clocked 3.5% growth It successfully launched more than 3 products across categories including new launches as well as variants. The aggressive product launches led to volume growth in beverages, prepared dishes and chocolate & confectionery segments Maggi made a strong comeback during the year and ended the year with a market share of 6%. The company launched variants of Maggi along with brand extension with soups and cuppa noodles (relaunched). With market share gain and strong marketing communications, Maggi gained back its credibility and stood at 39 th in Top 5 most valuable brands The milk products category continued to post volume decline amid stiff competition and spillover impact of Maggi fiasco. Though the company has launched value added and premium products, which include Greek yoghurt, protein rich drinks, ready to drink products and toddler food, volume continued to slide and declined 1.5% The beverage segment, which was witnessing a volume decline for the past two years, posted marginal volume growth of 1.3% with new product launches. Amid intense competition and promotional offers, its sales declined 3.1%, it was the only category to report revenue decline during the year. The instant tea remained flat for the year and instant coffee registered growth on account of increase in exports to Romania and Bangladesh Chocolate & confectionery segment was witnessing volume decline in the past five years on account of intense competition. However, owing to new launches and competitive pricing coupled with promotions, it clocked volume growth of 7.7% Infant nutrition exports also showed good growth. The company launched a product named Ceregrow for children in the age group of 2-5 and also renovated the entire Cerelac range by fortifying it with Iron to enhance the nutritional aspects. The company started exports of its confectionery products to eight markets in the Middle East and Ghana During the year, the company supplemented the provision for contingencies with further amount of crore (net) for contingencies resulting mainly from issues under litigation/dispute and other uncertainties Total dividend paid during the year was 63./share, amounting to 67.4 crore Nestlé s R&D centre India in Manesar has also brought Nestlé global research & development closer to Indian operations and is helping it to come up with more innovating products. For instance, the company launched more than 3 products during the year, which included new launches as well as variants and re-launches In light of its commitment to nutrition, health and wellness, the company has put QR codes on all products, which provides consumers information specific to product under three heads nutrition, environment and society The company is exploring ways to bring new products to the Indian market from the kitty of ~2 brands globally. Nestlé India s focus remains on innovation and nutrition. It is further planning to enter five new categories viz. Nespresso (a coffee machine), Dolce Gusto (coffee capsule system), petcare, healthcare & skincare ICICI Securities Ltd Retail Equity Research Page 9

10 Exhibit 14: Segmental growth over the years Sales growth (%) Milk Products Beverages Prepared dishes Chocolate & Cofectionery Volume growth (%) Milk Products Beverages Prepared dishes Chocolate & Cofectionery Realisation growth (%) Milk Products Beverages Prepared dishes Chocolate & Cofectionery ICICI Securities Ltd Retail Equity Research Page 1

11 Recommendation history vs. Consensus ( ) 8, 7, 6, 5, (%) 4, May- Jul- Sep- Dec- Feb-16 May-16 Jul-16 Oct-16 Dec-16 Feb-17. May-17 Price Idirect target Consensus Target Mean % Consensus with SELL Source: Bloomberg, Company, ICICIdirect.com Research Key events Date Event CY1 ITC and GSK Consumer enter instant noodles segment intensifying competition in the near monopoly segment for Nestlè Jul-11 Decline in coffee prices (~11% since April, 211); revenue growth & margins back to 2%+; FMCG Index return - ~33% in Q2CY11 Jan-12 Volume growth in CY11 dips to 7% vs. 17% in CY1; increasing prices due to higher input cost impacts volume growth; ITC gets aggressive in noodles segment with HUL re-launching Knorr in the segment H1CY12 Declining volume growth keeps revenue growth below %; higher margins (+21%) continue to drive profitability (+% YoY); stock supported by rising FMCG index (~26% return YoY) as a safe haven during underperforming markets CY12 Stock return ~13% due to less than 1% volume growth in CY12, thereby not justifying high valuations; FMCG Index return CY12 - ~3% Apr-13 Intensifying competition and incessant price increases across categories drags revenue growth to ~9% with volume growth at 2-3% Jul-13 Decline of ~25% in coffee prices YoY; revival in revenue growth to ~12% supported by price cuts in milk products and new launches in noodles segment; FMCG continues to remain the preferred sector among investors (FMCG Index return ~35% YoY in Q2CY13) Nov-13 Rumours of buyback by the parent drive stock price; revenue growth remains muted Jan- Softening commodity prices aiding the company's operating margins Apr- UP FSDA orders recall of 2,, packets of Maggi noodles citing higher lead content beyond permissible limit thereby declaring it unsafe Jun- FSSAI bans sale of Maggi noodles in India Oct- NIL declares that Maggi noodles are safe for consumption citing test results from 3 labs mandated by Bombay High Court Nov- NIL commences rollout of Maggi instant noodles through online and offline channels Top 1 Shareholders Rank Name Latest Filing Date % O/S Position (m) Change (m) 1 Nestle SA 31-Dec Maggi Enterprises, Ltd. 31-Dec Life Insurance Corporation of India 31-Dec ARISAIG Partners (Asia) Pte. Ltd. 31-Dec Aberdeen Asset Management (Asia) Ltd. 28-Feb Stewart Investors 31-Mar SBI Funds Management Pvt. Ltd. 31-Mar First State Investments (Singapore) 3-Nov The Vanguard Group, Inc. 31-Mar BlackRock Institutional Trust Company, N.A. 3-Apr Source: Reuters, ICICIdirect.com Research Recent Activity Shareholding Pattern (in %) Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Promoter FII DII Others Buys Sells Investor name Value Shares Investor name Value Shares Stewart Investors 6.14m.58m First State Investments (Singapore) m -.27m Life Insurance Corporation of India 32.61m.37m RBC Investment Management (Asia) Ltd. -9.3m -.1m BlackRock Institutional Trust Company, N.A. 1.93m.2m Lyxor Asset Management -9.7m -.9m Lombard Odier Darier Hentsch & Cie.95m.1m UTI Asset Management Co. Ltd. -2.7m -.3m Northern Trust Global Investments.85m.1m Invesco PowerShares Capital Management LLC -1.35m -.1m Source: Reuters, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 11

12 Financial summary Profit and loss statement Crore (Year-end December) CY CY16 CY17E CY18E Total operating Income Growth (%) Raw Material Expenses 2,92.6 3, , ,3. Employee Expenses ,38.6 1,185.3 Marketing Expenses Administrative Expenses Other expenses , , ,927.1 Total Operating Expenditure 6, , , ,163.8 EBITDA 1, ,19.7 2, ,531.5 Growth (%) Depreciation Interest Other Income PBT 1, , , ,9.1 Others Total Tax PAT ,1.4 1, ,489.8 Growth (%) EPS ( ) * CY16 onwards numbers are as per IND-AS Cash flow statement Crore (Year-end December) CY CY16 CY17E CY18E Profit after Tax ,1.4 1, ,489.8 Add: Depreciation (Inc)/dec in Current Assets Inc/(dec) in CL CF from operating activities ,14.9 1, ,584.2 (Inc)/dec in LT loans & adv (Inc)/dec in other investments (Inc)/dec in Fixed Assets Others CF from investing activities Issue/(Buy back) of Equity.... Inc/(dec) in loan funds Dividend paid & dividend tax ,7. -1,33.6 Inc/(dec) in Sec. premium.... Others CF from financing activities ,7. -1,348.3 Net Cash flow Opening Cash ,5. Closing Cash , , * CY16 onwards numbers are as per IND-AS Balance sheet Crore (Year-end December) CY CY16 CY17E CY18E Liabilities Equity Capital Reserve and Surplus 2, , , ,28.3 Total Shareholders funds 2, ,13.7 3, ,376.7 Total Debt Deferred Tax Liability Long Term Provisions 1, , ,72.2 1,588.7 Total Liabilities 4,64.7 5, , ,23.6 Assets Gross Block 5, ,26. 5,56. 5,86. Less: Acc Depreciation 2, ,53.5 2, ,238.4 Net Block 2, , , ,621.6 Capital WIP Total Fixed Assets 3, , , ,9.8 LT Loans & Advances Inventory , ,325.5 Debtors Loans and Advances Current Investments , Cash , Total Current Assets 2,485. 3,279. 3, ,82.5 Creditors Provisions Other Current Liabilities Total Current Liabilities 1, , , ,458.1 Net Current Assets 1,3.9 1, , ,624.4 Application of Funds 4,64.7 5, , ,23.6 * CY16 onwards numbers are as per IND-AS Key ratios (Year-end December) CY CY16 CY17E CY18E Per share data ( ) EPS Cash EPS BV DPS Cash Per Share Operating Ratios (%) EBITDA Margin PBT / Net Sales PAT Margin Inventory days Debtor days Creditor days Return Ratios (%) RoE RoCE RoIC Valuation Ratios (x) P/E EV / EBITDA EV / Net Sales Market Cap / Sales Price to Book Value Solvency Ratios Debt/EBITDA.... Debt / Equity.... Current Ratio Quick Ratio * CY16 onwards numbers are as per IND-AS. ICICI Securities Ltd Retail Equity Research Page 12

13 ICICIdirect.com coverage universe (FMCG) CMP M Cap EPS ( ) P/E (x) Price/Sales (x) RoCE (%) RoE (%) Sector / Company ( ) TP( ) Rating ( Cr) FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E Colgate (COLPAL) 1,1 95 Hold 24, Dabur India (DABIND) Hold 5, GSK CH (GLACON) 5,246 6,74 Buy 22, Hindustan Unilever (HINLEV) Buy 188, ITC Limited (ITC) Buy 347, Jyothy Lab (JYOLAB) Buy 6, Marico (MARLIM) Hold 4, Nestle (NESIND) 6,821 7,42 Buy 63, Tata Global Bev (TATGLO) Hold 9, VST Industries (VSTIND) 3,6 3,32 Hold 4, ICICI Securities Ltd Retail Equity Research Page 13

14 RATING RATIONALE ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock. Strong Buy: >%/2% for large caps/midcaps, respectively, with high conviction; Buy: >1%/% for large caps/midcaps, respectively; Hold: Up to +/-1%; Sell: -1% or more; Pankaj Pandey Head Research pankaj.pandey@icicisecurities.com ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC, Andheri (East) Mumbai 4 93 research@icicidirect.com ICICI Securities Ltd Retail Equity Research Page 14

15 ANALYST CERTIFICATION We /I, Sanjay Manyal, MBA (Finance) and Tejashwini Kumari, MBA (Finance), Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Terms & conditions and other disclosures: ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities Limited is a Sebi registered Research Analyst with Sebi Registration Number INH99. 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