Nestle Q3 Review — Results Below Expectations Led By Sales Miss; Nirmal Bang Maintains 'Buy' On The Stock

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Nirmal Bang Report

Nestle India Ltd. reported lower than expected numbers led by sales growth coming in at 3.9% YoY compared to expectations of 7.5% growth. Gross and Ebitda margins were in line with expectations and hence operating performance miss versus expectations by around 4% was led entirely by sales miss.

Given that a major domestic acquisition is unlikely, it is important that there is a step-up in innovation. In July 2024, we had highlighted about the portfolio that Nestle has in other Emerging Markets in a detailed note, some of which could potentially come to India eventually.

We remain constructive about the Packaged Foods growth opportunity in India and Nestle (along with Britannia Industries) has been at the forefront in driving growth for the past decade. Nestle’s return on capital employed is also the best-of-breed. Nevertheless, with weak top-line momentum compared to the past likely to persist for some time and expensive valuations of ~62 times FY26E EPS and 56x FY27E EPS make us maintain Hold rating on the stock.

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