Nestle India Ltd. share price target

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).

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.