NESTLEIND

REVIEW

is a market leader in coffee, noodle and baby food. Nestle is focusing on strengthening and protecting it high margin core business that is milk and nutrition, which contributes around 40 percent of the domestic sales. The company is also investing behind adjacencies, which will be a key growth driver in the coming period. Expanding manufacturing base and rural footprint with the RURBAN strategy will be growth accretive in the medium-term. The recent earning performance of the company was marked by moderate volume growth and margin compression due to high inflation and competition. However, we view that Nestle is a good a play on the packaged foods business in India, and will be one of the key beneficiaries of the urban demand revival.