Nestle India - Royalty Hiked, Retain Accumulate - Emkay

Reco: ACCUMULATE
CMP: Rs 4730
Target Price: Rs 5000

- Nestle India review General Licence Agreement (GLA) after 2 decades

- Royalty rates on domestic sales increased from 3.5% to 4.5% over 5 year's w.e.f January 1, 2014; staggered increase of 0.2% p.a.

- Assuming no offset, CY14E earnings would be impacted by 1%. However, we maintain our CY14E earnings estimates

- Draw comfort in FCF yield of 3.5% for CY13E, Maintain 'Accumulate' with target price of Rs 5,000/Share

Source : Equity Bulls

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