Nestle India Ltd. share price target

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

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

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

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

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