Nestle Nigeria Plc’s (Nestle) reported Revenue growth rate of 17.7% y/y to N261.77bn in its H1 2023 earnings result from N222.45bn in H1 2022. The company’s EBITDA also advanced by 30.6% y/y to N66.27bn from N50.76bn in H1 2022. However, Nestle’s Net Finance Cost grew significantly to N129.91bn from N2.44bn in H1 2022. This resulted in a Loss before tax of N69.19bn in H1 2023 compared with a profit before tax of N43.74bn in H1 2022.

The company has shown resilience in its revenue generation historically even amid the COVID-19 outbreak. Therefore, we believe that Revenue growth will be undeterred by inflationary pressures as the company has carved a niche for itself in the food production and consumables market.

We hold a Buy recommendation on Nestle with a price target of N1,414.70. We derive our price target using a combination of Discounted Cash Flow (DCF) and Relative valuation, assigning a weighting of 60:40.