Nestle India Ltd. share price target

Nestle’s revenue growth of 10% YoY is healthy and ~21-22% YoY growth in EBITDA/PAT is even stronger, driven by price retention benefits given stability in the raw material price (especially milk - report). Revenue growth was strong across key segments driven by (1) deeper penetration in RURBAN (lower-tier towns and villages (report), (2) a portfolio which is better insulated to market slowdown.

Domestic business posted double-digit growth in Q3 with continued margin expansion

We recommend a BUY rating on the stock with a near-term TP of Rs 24,100, implying an upside of 10% from the CMP.

NEST’s revenue for Q2CY23 grew by 15.1% YoY to INR 46,585 mn (-3.6% QoQ). All product categories registered double-digit growth for the 5th consecutive quarter. Domestic sales grew by 14.6% YoY, on the back of prudent pricing and supported by mix and volume with targeted brand support.

Q2 revenue up 15% YoY led by strong growth across categories and geographies; margins remained healthy

Recommendation: With an 10% upside potential from the CMP, we maintain our BUY rating on the stock.

Nestle’s revenue growth of 15% YoY in Q2CY23 was largely in line with our estimates. Double-digit growth across segments for fifth consecutive quarter was driven by (1) deeper distribution expansion in lower-tier towns and villages (see our report), (2) strong performance in mega and metro cities, and (3) a portfolio which is better insulated to overall market slowdown.