Nestle India Ltd. share price target

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

Domestic sales continue to underpin growth, rising 8.9% YoY in the December quarter on better pricing, volumes and product mix

NEST’s revenue for Q3CY23 grew by 9.5% YoY/ 8.1% QoQ to INR 50,368 Mn. Domestic sales grew by 10.3% YoY/ 9.1% QoQ, aided by mix, volume and price. Export sales declined by 9.6% YoY/ 6.5% QoQ. Prepared Dishes and Cooking Aids saw continued growth momentum across the portfolio, driven by market visibility, media campaigns and targeted consumer engagement initiatives aided by innovation, especially for RURBAN markets.

Incremental insights from Nestle's analyst meet were – (1) sales-driven initiatives have contributed ~3-4% of ~7% volume CAGR over last 5 years (see our report); however, incrementally, line selling will be the key driver (though at a slower pace), (2) penetration-led volume growth (through continued thrust on rurban strategy), (3) dialling up of innovation (multiple niche launches; 10 new projects in the pipeline) to drive its contribution to 10% (from 6% currently) in the medium term.

Innovation and market penetration-led volume growth remain strategic focus areas; growing emphasis on rural markets