Nestle India Ltd. share price target

Nestle India (Nestle) reported weak 3.3% YoY revenue growth (est. 8.6%) in 1QFY25. Last eight-quarter average revenue growth was 14%.

NEST’s overall performance for Q5FY24 was in-line with our estimates. While sales were marginally lower by 0.9%, EBITDA and Adj. PAT performance was as per expectations.

With a 12% upside potential from the CMP, we maintain our BUY rating on the stock.

Nestle India (NEST) reported 9% YoY revenue growth (est. 8.5%) during the
quarter ended Mar’24. The company has achieved 12% revenue CAGR over a
five-year period (CY18-FY24). Domestic sales grew 9% YoY, well supported by
pricing, mix, and volume growth. Export sales rose 19% YoY to INR2.3b for the
quarter

Strong growth witnessed across geographies driven by sustained growth in domestic markets and healthy double-digit growth in exports

Positively, low cocoa content in Nestle products (~5% vs ~20% in peers) provides market share gain opportunity in the chocolate category (Nestle has higher revenue salience in wafer segment).

Our REDUCE call on Nestlé is a factor of valuations (62x P/E for FY26) pricingin the positive outlook. Capacity augmentation (Rs64bn capex spends over
CY20-25), a wider parent portfolio (gaining relevance in the Indian context),
and thrust on rural, all bolster the fundamentals

NEST’s revenue for Q4CY23 grew by 8.1% YoY but declined by 8.7% QoQ to INR 46,004 Mn. Domestic revenue (96.5% revenue share) growth decelerated but remained healthy at 8.9% YoY vs. 15.1% YoY growth seen in 9MCY23.