JP Morgan retains Neutral rating on Nestle India

JP Morgan has retained Neutral rating on Nestle India Limited after the company reported the financial results for the quarter and year ended December 31, 2012.

Nestlé India registered Net Sales, EBITDA and adjusted PAT growth of 10%, 20% and 10% respectively for Q4CY12. Operating margin expansion was better than expectations while sales growth was slightly below expectations.

JP Morgan's earnings estimates are largely unchanged. Volume growth continues to remain subdued given severe impact from aggressive pricing, portfolio/channel optimization, and weak consumer sentiment.

The research firm remains constructive on the company's long term growth potential, but see near term growth challenges and current valuations at 35x CY13E and 30x CY14E P/E as limiting upside potential.

Source : Equity Bulls

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