For 4QCY2007, Nestle reported a strong Topline growth of 22% yoy to Rs896cr and Bottomline registered a much stronger growth of 50% to Rs94cr. Revenue growth was aided by steady growth in its Net Domestic Sales (up 22% yoy to Rs803cr) and buoyant Exports (up 22% yoy to Rs93cr). For the quarter, Nestles operating margins expanded 115bp to 17.6% driving an EBITDA growth of 30% yoy to Rs158cr. We believe Nestle offers the best opportunity to play out the growing Food Processing theme in India. At the CMP of Rs1,432, the stock is trading at 22x CY2009E Earnings and 13.7x EV/EBITDA. Nestle justifies its premium valuations compared to its peers on account of its global parent support, strong brand recall, excellent Return Ratios and superior EBITDA Margins. We maintain a Buy on the stock.

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