Nestle India reports good results for Quarter ending September 2020, declares Rs.135 per share interim dividend.

Interim Dividend

Nestle India announced results for the quarter ended September 2020 (Q3CY20). The board has declared an interim dividend for 2020 of Rs 135 per equity share amounting to Rs 1,302 crore, which will be paid on and from November 20, 2020.

Quarterly Numbers 

The packaged foods company’s total sales and domestic sales both increased by 10.2 per cent, driven by volume and mix. 

Export sales increased by 9.4 per cent. 

The company stated that double-digit growth was seen in the Noodles, Coffee, and Chocolates categories.

However, the company reported flat net profit of Rs 587 crore in Q3CY20 against Rs 595 crore in Q3CY19 due to lower effective tax rate in the base. Ebitda (earnings before interest, taxes, depreciation, and amortization) margin improved to 24.2 per cent from 23.1 per cent during the quarter.

The net profit after tax are not comparable as the cumulative effect of lower tax rate made applicable from April 1, 2019 was adjusted fully in quarter ended September 2019, the company said.

After a blip in Q2CY20 (led by supply-chain issues), the company resumed double-digit sales growth in Q3CY20 – which appears likely to sustain given the continued benefits of an in-home consumption boost. Lower milk, wheat, and sugar costs also led to sequential gross margin improvement. Consequently, Ebitda also grew in double-digits, a first after seven quarters, Motilal Oswal Securities said.

Expansion plans

The company announced a capex of Rs 2,600 crore over the next 3–4 years would boost longer-term growth prospects. However, it also signifies an end to the sweet spot that the company enjoyed until CY19, when it was able to take advantage of erstwhile significantly underutilized capacity. It benefited particularly after the resumption of strong sales growth, driven by a change in leadership post the Maggi crisis in 2015, the brokerage firm said with ‘neutral’ rating on the stock.

Nestle India stock - past 5 years 

Nestle India stock - past 1 year 

Nestle India's Business 

Nestle India Ltd, one the biggest players in FMCG segment, has a presence in milk & nutrition, beverages, prepared dishes & cooking aids & chocolate & confectionery segments.

The company is engaged in food business under the following categories 

1.  milk products and nutrition,
2.  beverages,
3.  prepared dishes and cooking aids,
4.  chocolates and confectionery.

 Nestle India manufactures products under brand names, such as

1.  Nescafe,
2.  Maggi,
3.  Milkybar,
4.  Milo,
5.  Kit Kat,
6.  Bar-One,
7.  Milkmaid.

Nestle India is a subsidiary of Nestle S.A. of SwitzerlandThe company has presence across India with 8 manufacturing facilities and four branch offices spread across the region.

The company's head office is located in Gurgaon, Haryana.Nestle India Ltd was incorporated in the year 1956.

(disclaimer : This blog is for information purposes only and not to solicit any business or provide any advise)

Nestle India is 4 times since first listing in Jan 2010.

Nestle India Ltd, one the biggest players in FMCG segment, has a presence in milk & nutrition, beverages, prepared dishes & cooking aids & chocolate & confectionery segments.

The company is engaged in food business under the following categories 

1.  milk products and nutrition,
2.  beverages,
3.  prepared dishes and cooking aids,
4.  chocolates and confectionery.

 Nestle India manufactures products under brand names, such as

1.  Nescafe,
2.  Maggi,
3.  Milkybar,
4.  Milo,
5.  Kit Kat,
6.  Bar-One,
7.  Milkmaid.

Nestle India is a subsidiary of Nestle S.A. of SwitzerlandThe company has presence across India with 8 manufacturing facilities and four branch offices spread across the region.

The company's head office is located in Gurgaon, Haryana.Nestle India Ltd was incorporated in the year 1956.

Stock Price

Jan 8, 2010: Rs.2494.65 per share 

Nov 2, 2018: Rs.10230.10 per share

Stock Price of Nestle India from 8/1/2010 to 2/11/2018 ( Source: National Stock Exchange of India)

(Source : www.nestle.in, www.nseindia.com, wikipedia)

DISCLAIMER :  THIS BLOG IS FOR INFORMATION AND NOT TO SOLICIT ANY BUSINESS. PAST PERFORMANCE IS NOT AN INDICATION OF THE 

PERFORMANCE OF STOCK IN FUTURE. 

Nestle India - 11% crease in sales compared to same Qtr last year. Maggi and Nescafe help sales.

Nestle India on Tuesday reported a 11.15 per cent rise in net profit of the quarter ended June to Rs 486. 6 crore. 

The maker of Maggi Noodles had reported a net profit of Rs 437.8 crore in the same quarter a year ago. Analysts had expected the company to post a net profit of Rs 502 crore. 

Total sales came in at Rs 3,041.5 crore, compared with Rs 2,982.8 crore a year ago. 


Nestle India said while its total sales increased by 2 per cent, domestic sales increased by 2.6 per cent and export sales declined by 9.3 per cent.

It said sales were adversely impacted due to the Covid-19 induced lockdown leading to production disruption across factories. 

It said its profit after tax and earnings per share have been positively impacted by the lower tax rates.

Nestle India Stock Price Past 1 year

(Source www.nseindia.com)

Nestle India Stock Price Past 5 years

(Source www.nseindia.com)

To read previous blogs on Nestle READ HERE

To read Nestle Qtrly Report as filed with the stock exchange READ HERE

DISCLAIMER :  THIS BLOG IS FOR INFORMATION AND NOT TO SOLICIT ANY BUSINESS. PAST PERFORMANCE IS NOT AN INDICATION OF THE PERFORMANCE OF STOCK IN FUTURE.  STOCK INVESTING IS A WTH RISK INVESTING INCLUDING RISK TO THE PRINCIPAL AMOUNT INVESTED. PLEASE MAKE AN INFORMED DECISION.

Nestle India posts good quarterly results. Decent growth expected.

Fast moving consumer goods company Nestle India on Tuesday reported a 9.25 per cent year-on-year growth in net profit at Rs 463.28 crore for the first quarter ended March 31, 2019.
The company had posted posted net profit of Rs 424.03 crore in March quarter last year.  

The company's revenue from operations rose 8.91 per cent to Rs 3,003 crore from Rs 2,757.24 crore in the corresponding quarter last year.

During the Jan-March 2019 quarter the company faced headwinds on account of higher input costs.  This was due to some inflationary pressure in commodities such as milk.  The company will take measures to counter such price increase.

Amongst its various brands Maggi, Kitkat and Munch delivered strong growth. 

Nestle's results come as somewhat of a relief amid a rural slowdown as reported by most other consumer goods firm in the March quarter.

This is because compared to other firms such as Dabur and HUL, Nestle's exposure to rural markets is less. 

Its domestic sales contribute to about 94.2% of its domestic sales.  The remaining is from exports.  Domestic sales grew by 10% in the year 2018 and is expected to grow at 7% in the year 2019.

The company also announced that it plans to expand its products portfolio in to the organic foods market within categories such as milk and nutrition products.  These launches will happen in the coming months. It will be worthwhile to watch how these new products fare in the market.  A lot will depend on them considering the stock trades at 52pe multiple - not a very cheap valuation.  Also a large percentage of company's sales in India come from Urban Markets - which is comforting - considering that the slowdown is largely rural.  

Nestle India Stock is 2.22 time in last 5 years

(Source: www.nseindia.com)

Nestle India Stock is 4.07 times in the past 9.5 years

(Source: www.nseindia.com)

Our previous blog on Nestle written on 6th March, 2019.

(Disclaimer : For the propose of information only and not to solicit any business or to recommend or advise.  I have investments in each of these stocks)

Indian Branded Food Industry and top 5 food companies in India.

India is the second largest producer of food in the world. With a continuous and rapid growth, this industry is expected to go twofold in the next decade or so. 

The industry incorporates and utilises latest food processing technologies on a regular basis so as to meet the requirements of the citizens of modern day India.

India's food ecosystem offers huge opportunities for investments with stimulating growth in the food retail sector, favourable economic policies and attractive fiscal incentives.

Market Size

The Indian food and grocery market is the world’s sixth largest, with retail contributing 70 per cent of the sales.

The Indian food processing industry accounts for 32 per cent of the country’s total food market, one of the largest industries in India and is ranked fifth in terms of production, consumption, export and expected growth.

The Indian Retail Food market in 2017 is estimated to be worth USD 487 billion.

Future Prospects

• By 2020, Indian Retail Foodl market is projected to touch $ 828.92 bn
• By 2020, the Indian Dairy industry is expected to double to $ 140 bn
• By 2030, Indian annual household consumption to treble, making India 5th largest consumer.

Top 5 Food Listed Food Companies in India

(Source : www.moneycontrol.com)

Nestle India is 4 times in last 9 years

To know more about Nestle read here.

Britannia is 6.3 times in last 5 years.

Glaxo Consumer is 20 times in last 16 years.

To know more about Glaxo Consumer read here

DISCLAIMER :  THIS BLOG IS FOR INFORMATION AND NOT TO SOLICIT ANY BUSINESS. PAST PERFORMANCE IS NOT AN INDICATION OF THE PERFORMANCE OF STOCK IN FUTURE. 

10 year high return stocks which have performed well in last 1year, 3year. Will they continue to grow?

As the Indian Economy slows down there have been companies which continue to do well - in fact some of them have increased their financial performance in the last year and the current financial year.

As the environment becomes tough some companies tend to do better - gaining market share from a weaker competition.

It is also to do with, better business model, brand recall, customer loyalty and superior execution strategy.

Here are Sales Growth, Profit Growth, Stock Price and Return on Equity of some companies. 

Their stock prices have grown by more than 20% for the last 10 years and have grown by more than 30% in the past one year.  In other words they have actually done better.

More than giving returns for a year, these companies over a 3,5,10 year have created significant wealth for there investors - and these are all large cap stocks.

These we believe, are the "core portfolio" stocks which investors must own for a long periods of time.

BAJAJ FINANCE 

(SOURCE screener.in)

Compounded Sales Growth : 

10 years : 40.40%

5 years : 33.88%

3 years : 33.55%

Compounded Profit Growth 

10 years : 60.69%

5 years : 40.14%

3 years : 44.87%

Return on Equity 

10 years : 20.82%

5 years : 21.06%

3 years : 21.12% 

Stock Price Returns  (CAGR - compounded average growth rate)

10 years : 66.00%

5 years : 69.53%

3 years : 69.37%

1 year : 82.45%

ASIAN PAINTS 

(SOURCE screener.in)

Compounded Sales Growth : 

10 years : 13.92%

5 years : 9.61%

3 years : 10.66%

Compounded Profit Growth 

10 years : 18.44%

5 years : 12.14%

3 years : 7.48%

Return on Equity 

10 years : 30.28%

5 years : 27.16%

3 years : 23.98% 

Stock Price Returns  (CAGR - compounded average growth rate)

10 years : 26.47%

5 years : 21.42%

3 years : 22.62%

1 year : 38.06%

HDFC BANK

(SOURCE screener.in)

Compounded Sales Growth 

10 years : 20.48%

5 years : 19.83%

3 years : 18.52%

Compounded Profit Growth 

10 years : 25.82%

5 years : 20.63%

3 years : 20.37%

Return on Equity 

10 years : 18.48%

5 years : 18.18%

3 years : 16.96% 

Stock Price Returns  (CAGR - compounded average growth rate)

10 years : 21.99%

5 years : 22.01%

3 years : 25.29%

1 year : 30.47%

NESTLE 

(SOURCE : screener.in)

Compounded Sales Growth : 

10 years : 10.07%

5 years : 4.41%

3 years : 11.17%

Compounded Profit Growth 

10 years : 11.61%

5 years : 7.72%

3 years : 21.97%

Return on Equity 

10 years : 49.43%

5 years : 38.43%

3 years : 38.60% 

Stock Price Returns  (CAGR - compounded average growth rate)

10 years : 18.41%

5 years : 17.64%

3 years : 31.53%

1 year : 40.31%

DISCLAIMER :  THIS BLOG IS FOR INFORMATION AND NOT TO SOLICIT ANY BUSINESS. PAST PERFORMANCE IS NOT AN INDICATION OF THE PERFORMANCE OF STOCK IN FUTURE. EQUITY STOCK INVESTING IS A WITH RISK INVESTING INCLUDING RISK ON CAPITAL INVESTED. PLEASE TAKE AN INFORMED DECISION BEFORE INVESTING IN A EQUITY STOCK

In markets, bigger is less riskier and gives better returns - fails CAPM - Capital Asset Pricing Model - How?

Capital Asset Pricing Model 

According to Investopedia - "The Capital Asset Pricing Model (CAPM) describes the relationship between systematic risk and expected return for assets, particularly stocks. CAPM is widely used throughout finance for pricing risky securities and generating expected returns for assets given the risk of those assets and cost of capital."

Problems With the CAPM 

There are several assumptions behind the CAPM formula that have been shown not to hold in reality. Modern financial theory rests on two assumptions: 

(1) securities markets are very competitive and efficient (that is, relevant information about the companies is quickly and universally distributed and absorbed); 

(2) these markets are dominated by rational, risk-averse investors, who seek to maximize satisfaction from returns on their investments.

In real life....

In real market terms none of the these assumptions are 100% correct.  Even when the trading terminals have become electronic, financial results are announced over the internet and TV , there still are inefficiencies in the dissemination of information. 

Also all investors may not the equally inclined to collect the same type of information.

This creates bias.

Moreover what is the correctness in a management of a company providing for financial results and guidance of future performance.  

There is vast information available on irregularities of companies - having hidden sensitive information from investors.  

Flight to safety 

In uncertain times, the investor behaviour is to move capital towards safety - which in the equity market terms can also be interpreted as - surety of returns. 

Investors tend to believe that a company which has generated profits consistently, enjoys a market leaders position, has a superiors business model - will again provide for good numbers.  This means it will again generate profits and make its business even more stronger. 

And hence, even though these stocks are very expensive, money still moves to these stocks. 

Let's look at some examples. 

International Stocks 

Apple stock - last 5 years

Steve Jobs unfortunate demise - October 5, 2011.  Many critics of Apple had predicted the downfall of the company post Steve Jobs. 

Apple Stock over last 5 years is approx 5 times. 

Microsoft stock - last 5 years

Indian Stocks 

Reliance stock - last 5 years

TCS stock - last 5 years

Nestle India stock - last 5 years

Asian Paints stock - last 5 years

(Disclaimer : This blog is for information purposes and not to solicit any business or provide any kind of investment advise.)

THE BUY AND FORGET - COFFEE CAN INVESTING. Does it work?

IN a paper in 1984, Robert Kirby of Kirby capital had narrated an incident involving his client's husband who had purchased stocks recommended by Kirby at $5000/- each.   He did not ever sell anything.  Metaphorically he stuffed the certificates in a coffee can.  ( In the 1900s much before bank branches spread, Americans used to save their valuables and cash in a coffee can).  

A decade later these tuned out to have created enormous wealth.  One holdings was Xerox which ballooned to over $800,000 in value.  In describing this outcome of "buy and forget" Kirby coined the term coffee can portfolio.  

Let's look ate some of the stocks in India - which fit the coffee can approach.  

Simple products, preferably essential and companies which dominate the market of these products/services and hence enjoy pricing power.  

5 year stock price charts of some of these companies will tell u a lot about the "buy and forget" coffee can strategy. 

Asian Paints is 2.7 times in last 5 years

NESTLE INDIA is 2.17 times in last 5 years

RELIANCE Industries in 2.56 times in last 5 years 

HDFC Bank is more than 2.3 times in the last 5 years 

TCS is 2 times in the last 5 years 

(Disclaimer : For the propose of information only and not to solicit any business or to recommend or advise.  I have investments in each of these stocks)

Stocks - The New SEBI Definition.

SEBI - Securities and Exchange Board of India in its circular dated October 6, 2017 has changed the definition of Large Cap, Mid Cap and Small Cap stocks as follows ( excerpt from the circular mentioned below, to read the circular click on the link given below)


Definition of Large Cap, Mid Cap and Small Cap:
7. In order to ensure uniformity in respect of the investment universe for equity
schemes, it has been decided to define large cap, mid cap and small cap as follows:

1. Large Cap: 1st -100th company in terms of full market capitalization
2. Mid Cap: 101st -250th company in terms of full market capitalization
3. Small Cap: 251st company onwards in terms of full market capitalization
   https://www.amfiindia.com/Themes/Theme1/downloads/1507291273374.pdf
   
   
   ________________________________________________________________
   
   
   Consequently the Large cap stocks ( data as on June 30th, 2018) are mentioned below (for categorisation of more stocks refer to the link https://www.amfiindia.com/research-information/other-data/categorization-of-stocks)

TATA CONSULTANCY SERVICES LTD.

RELIANCE INDUSTRIES LTD

HDFC BANK LTD.

ITC LTD

HINDUSTAN UNILEVER LTD.,

HOUSING DEVELOPMENT FINANCE CORP.LT

MARUTI SUZUKI INDIA  LTD.

INFOSYS LTD

OIL AND NATURAL GAS CORPORATION LTD

STATE BANK OF INDIA,

KOTAK MAHINDRA BANK LTD.

ICICI BANK LTD.

LARSEN & TOUBRO LIMITED

COAL INDIA LIMITED

INDIAN OIL CORPORATION LTD.

BHARTI AIRTEL  LTD.

NTPC LIMITED

AXIS BANK LTD.

HCL TECHNOLOGIES LTD

WIPRO  LTD.,

HINDUSTAN ZINC LTD.,

SUN PHARMACEUTICAL INDUSTRIES LTD.

ASIAN PAINTS LTD.

TATA MOTORS LTD.

ULTRATECH CEMENT LTD

VEDANTA LIMITED

BAJAJ FINANCE LIMITED

INDUSIND BANK LTD.

POWER GRID CORPORATION OF INDIA LIMITED

MAHINDRA & MAHINDRA LTD.

HDFC STANDARD LIFE INSURANCE COMPANY LIMITED

BHARAT PETROLEUM CORPN. LTD.,

BAJAJ AUTO LIMITED

BAJAJ FINSERV LIMITED

AVENUE SUPERMARTS LIMITED

NESTLE INDIA LTD.

ADANI PORTS AND SPECIAL ECONOMIC ZONE LTD

TITAN COMPANY LIMITED

EICHER MOTORS LTD.

YES BANK LTD.

JSW STEEL LIMITED

GODREJ CONSUMER PRODUCTS LTD.

HERO MOTOCORP LIMITED

GRASIM INDUSTRIES LTD.,

GAIL (INDIA) LTD.

MOTHERSON SUMI SYSTEMS LTD.,

SBI LIFE INSURANCE COMPANY LIMITED

TATA STEEL LIMITED

GENERAL INSURANCE CORPORATION OF INDIA

DABUR INDIA LTD.

BRITANNIA INDUSTRIES LTD.,

TECH MAHINDRA LIMITED

BHARTI INFRATEL LIMITED

BANDHAN BANK LIMITED

SHREE CEMENTS LTD.,

ICICI PRUDENTIAL LIFE INSURANCE COMPANY LIMITED

BOSCH LTD

ZEE ENTERTAINMENT ENTERPRISES LTD.

THE NEW INDIA ASSURANCE COMPANY LIMITED

HINDALCO INDUSTRIES LTD.

INDIABULLS HOUSING FINANCE LIMITED

HINDUSTAN PETROLEUM CORPORATION LTD

PIDILITE INDUSTRIES LTD.

INTERGLOBE AVIATION LIMITED

UNITED SPIRITS LIMITED

AMBUJA CEMENTS LTD.

CIPLA LTD.,

PIRAMAL ENTERPRISES LIMITED

ASHOK LEYLAND LTD.,

MARICO LIMITED

CADILA HEALTHCARE LTD.

SIEMENS LTD.,

NMDC LTD

DLF LIMITED

LUPIN LTD

UPL LIMITED

BIOCON LTD.

SUN TV NETWORK LIMITED

DR. REDDY'S LABORATORIES LTD.,

AUROBINDO PHARMA LTD.

BANK OF BARODA

ICICI LOMBARD GENERAL INSURANCE COMPANY LIMITED

BHARAT ELECTRONICS LTD.,

HINDUSTAN AERONAUTICS LIMITED

PETRONET LNG LTD.

ADITYA BIRLA CAPITAL LTD

ORACLE FINANCIAL SERVICES SOFTWARE LIMITED

STEEL AUTHORITY OF INDIA LTD.,

HAVELLS INDIA LIMITED

BHARAT FORGE LTD

SHRIRAM TRANSPORT FINANCE CO. LTD.,

CONTAINER CORPORATION OF INDIA LTD.

L&T FINANCE HOLDINGS LIMITED

BHARAT HEAVY ELECTRICALS LTD.,

M.R.F. LTD.,

IDEA CELLULAR LTD

PROCTER & GAMBLE HYGIENE & HEALTH CARE LTD.

BAJAJ HOLDINGS & INVESTMENT LIMITED

TVS MOTOR COMPANY LTD.

COLGATE-PALMOLIVE (INDIA) LTD.,