With this series of BICII – Best Indian Companies to Invest In, TMM introducing another classic business, Nestle India, to our readers. Nestle is the Indian arm of Swiss multinational Nestlé S.A., operating in Indian market since 1961. The relationship with India originally set up from 1912, before the independence of India.
When coming to Nestle, saying anything more about the company required because of its popularity in Indian market with clear monopoly in the segments of child cereals. In an other word, each Indian kid has direct affection with Nestle due to tasting any of its baby foods immediately after they born.
When come to the vast range of product portfolio, our journey starts with Nestle Nan the classic baby cereals available each and every corner in India. Starting with its milk and nutrition product brand ‘everyday’, the journey going through the fantastic food product ‘Maggi Noodles’, various chocolate products like KitKat, Polo, Munch, Milkibar and many chocolate products along with its super drink brand Nescafe, bringing Nestle one of the top layer company in India with clear monopolistic position with number of products.
If come to the management side to consider the efficiency level, Nestle has one of the most efficient and excellent management team to lead the company to further. They have enough ideas and innovations time to time to close with economy changes. The Company continuously focuses its efforts to better understand the changing lifestyles of India and anticipate consumer needs in order to provide Taste, Nutrition, Health and Wellness through its product offerings.
When coming to the performance side of Nestle, I don’t think much more deep analysis required. Nestle is a clear candidate meeting all required set of value investing criteria by being a zero debt company, consistently raising net income, sales, lest cost to sales, management efficiency etc. Company has no limit for time to time innovations and strict on maintaining excellent product standards. It has consistent per sharing earning for years and solid dividend history support the company to select as a fantastic value investing candidate.
What else more, investing to Nestle at present is little costly because of its high price and P/E ratio compare with industry. If you invest with today’s listed price, you are going to get an initial rate of return that not more than 3.5%. It clearly tells you to wait further to reach the price near to Rs. 1000 to get a minimum initial rate of return of 6% compare to its last informed Per share Earning of 59.25.
No doubt, Nestle is a value investing candidate. It meet almost all the criteria except the buying price. As a value investor, we have to wait little more to reach the price to a comfort level.