>Nestle Ltd - Buy (INDIA INFOLINE)

NESTLE Ltd. - BUY
CMP 1480 Target 1816

Best play on the India consumersiation story
india is witnessing a major shift in consumer taste in favour of packaged foods aided by increased oenetration of organized retail. Nestle with its among brand equity, well diversified product portfolio and aggresive low price strategy is well poised to be a major beneficiary from India's consumerisation story. Despite the current weakening economic environment, Nestle has managed to record over 20% growth for consecutive seven quarters. We believe, the growth momentum would continue as pricing power and continuous innovation would enable Nestle to increase its market share in the near term. We expect the company to witness revenue CAGR of 16% over
F12/08-10E.

Enjoys pricing power
Nestle's well-diversified product portfolio includes some of the best-knowns brands globally. Its major brands - Maggi, Nestle, Nescafe and Kit Kat are amongst the top brands in India. Compared to other FMCG players, Nestle is less exposed to regional competition as the manufacturing process in most of its product categories is technology intensive. We believe, Nestle's strategy of increasing premium priced brand variants coupled with selective price hikes would fuel margin expansion.

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