Nestle India

Nestle India has generated great returns for its investors in the last five years.

It is time to consider this.

As of last Friday, it was trading at 52x last year earnings and 6.5X sales. Dividend yield is about 0.4%. Nestle grew its profit 5.5 times in the last ten years. Even if one assumed that it does the same in the next ten years, it would be trading 10 times 2023 earnings (which makes no sense)

If it was trading 30 times earnings, it would worth about 150,000 crores or $ 25 Billion in 2023. That is a 11.6% growth over the next ten years....

As against the perception of the users that Nestle India can provide a risk free return, I think this scrip will probably have more return free risk!!! Investors must be drinking a lot of kool aid to buy into this story and become part owners at this stage. I think the best days are behind it at these valuations.... unless investors are betting that Nestle will buyback shares similar to GSK and HUL at these low levels of INR

Make no mistake about it... it is a terrific, terrific franchise with a great management and sticky brands but it is not worth an infinite price.