Nestle India Ltd. share price target

We remain optimistic about the company's long-term prospects. With an 11% upside potential from the CMP, we maintain our BUY rating on the stock.

Nestle’s Q2FY25 revenue growth was disappointing; it further de-accelerated to 1% YoY (vs 4% in Q1FY25) due to subdued consumer demand.

Nestle India (Nestle) reported weak revenue growth of 1% YoY (est. 6%) in 2QFY25. Last eight-quarter average revenue growth was 10%. Domestic sales grew 1% YoY, impacted by muted demand and higher commodity prices.

We downgrade Nestlé India to REDUCE from Add with a 14.3% cut in TP to Rs2,400 amid sustained topline pressures.

Sales came in 4% below consensus while EBITDA was 10% lower due to margin being 152bps below expectations

Nestle India’s (Nestle’s) Q2FY2025 numbers were weak, missing estimates on all fronts. Muted revenue growth at 1.3% y-o-y along with 144 bps y-o-y decline in OPM and lower other income lead to 9.1% y-o-y decline in adjusted PAT.

We maintain our BUY rating on the stock.

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

Nestle’s revenue performance has de-accelerated to 4% YoY (1% mix/volume led, 3% pricing vs 4% UVG delivered by HUL) in Q1FY25. Outperformance in beverage business (double-digit revenue growth) despite harsh summer is encouraging.

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

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

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).