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    Nestle India Report

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    Aditya Kumar Padhiary
    Nestle India is a food and beverage company established in India in 1866. It offers popular brands like Nescafe, Maggi, KitKat and Milkybar. A financial analysis of Nestle India from 2016-2020 shows that the company is profitable and generating positive cash flows. Key profitability ratios like return on equity, return on capital expenditure and earnings per share have been increasing during this period, indicating higher profits and ability to reward shareholders. Solvency and liquidity ratios also remain healthy, demonstrating the company's financial strength.

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    Nestle India Report

    Uploaded by

    Aditya Kumar Padhiary
    40 views3 pages
    Nestle India is a food and beverage company established in India in 1866. It offers popular brands like Nescafe, Maggi, KitKat and Milkybar. A financial analysis of Nestle India from 2016-2020 shows that the company is profitable and generating positive cash flows. Key profitability ratios like return on equity, return on capital expenditure and earnings per share have been increasing during this period, indicating higher profits and ability to reward shareholders. Solvency and liquidity ratios also remain healthy, demonstrating the company's financial strength.

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    Nestle India is a food and beverage company established in India in 1866. It offers popular brands like Nescafe, Maggi, KitKat and Milkybar. A financial analysis of Nestle India from 2016-2020 shows that the company is profitable and generating positive cash flows. Key profitability ratios like return on equity, return on capital expenditure and earnings per share have been increasing during this period, indicating higher profits and ability to reward shareholders. Solvency and liquidity ratios also remain healthy, demonstrating the company's financial strength.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    40 views3 pages

    Nestle India Report

    Uploaded by

    Aditya Kumar Padhiary
    Nestle India is a food and beverage company established in India in 1866. It offers popular brands like Nescafe, Maggi, KitKat and Milkybar. A financial analysis of Nestle India from 2016-2020 shows that the company is profitable and generating positive cash flows. Key profitability ratios like return on equity, return on capital expenditure and earnings per share have been increasing during this period, indicating higher profits and ability to reward shareholders. Solvency and liquidity ratios also remain healthy, demonstrating the company's financial strength.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    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

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