Nestle India

About Nestle India:

Nestle India Limited is a food-related corporation established in India. Nestle is a

global leader in nutrition, health, and wellness. In 1866, the company was
established. Milk products and nutrition, drinks, prepared foods and culinary aids,
chocolates and confectionary are all part of the food industry. NESCAFE, MAGGI,
MILKYBAR, KIT KAT, and more brands are among the company's offerings.

Financial Analysis

In 2020, CFO is positive, CFF is negative, and CFI is negative. Therefore, Nestle
India is a growing company.

Free cash flows (FCF) are observed to be increasing from 2016-2020. In 2019 and
2020, FCF is positive. This implies that is generating enough cash after cash
outflows and maintaining its capital assets. This also means company can pay its
creditors, and dividends and interest to investors.

Economic added value (EVA) is positive, which means company is generation

revenue after Net operating profit is adjusted for charged capital. The EVA is
increasing from 2016-2020 which suggests that the value of the company is
increasing.

Profitability Ratios

It can be observed that Return on Equity (ROE), return on capital expenditure

(ROCE) and Earnings per share (EPS) are increasing from 2016-2020.

Increasing ROCE indicates that company could generate profit and can invest
large part of its capital for benefit of its shareholders.

Rising EPS means Nestle India is a profit-making company. A higher EPS indicates
greater value because investors are willing to pay more for a company's shares.
As tax burden and interest burden are increasing during 2016-2020, this should
cause EPS to decrease but due to high asset turnover ratio (asset-to-equity ratio)
EPS is increasing.

Both rising ROE and EPS suggests that Nestle India has profit distributing ability
which is a good sign for shareholders.

Increasing PAT to sales ratio suggests that company generates enough profit that
can be distributed as dividend to its shareholders.

With consistent cash flow and increasing assets to equity ratio, suggests that
shareholders money is used efficiently to maintain both current and non-current
assets. The company is relying less on debt to finance its assets for generating
revenue.

Solvency Ratios

The debt-to-equity ratio is less than 1 which suggests that company generates
revenue from utilizing its assets instead of relying on debt to run its operations.

Higher interest coverage ratio also suggest that company can pay its interest on
its debt without getting into any debt trap.

Liquidity Ratio

Nestle India has been able to maintain its current ratio greater than 1.5. This
suggests that company can payoff current liabilities with current assets as cash.

Low average debtors to sales ratio suggest that company can collect payment
after sales within short period of time.

Positive Working capital indicates that a company can fund its current operations
and invest in future activities and growth. But increasing inventory company can
maintain decreasing working capital. This suggests that company can invest its
excess cash in assets and operations.

To acquire 10% stake,

No of shares=9.642 Crore
Share price=Rs. 18,945.05

Cost of investment=10%*9.642 Crore* Rs. 18,945.05=Rs. 18,266.82 Crore