Maggi To Nescafé: Nestlé Poised For Near-Term Upside As Morgan Stanley Bets On Double-Digit Growth

Nestlé India delivered a stellar performance in the first quarter of fiscal 2026-27 (Q1FY27), exceeding consensus and brokerage expectations across all major financial metrics. Driven by healthy volume growth and expanded rural reach, the leading FMCG giant reported strong double-digit growth across multiple product categories along with healthy volume growth.

Brokerages have responded positively to the execution under Nestlé India's new leadership, noting the firm's strengthened brand-consumer connections and expanded new-product intensity. Morgan Stanley highlighted that the positive trends in top-line growth momentum and management's focus on driving growth augur well for the stock's near-term performance. 

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The FMCG giant's net profit jumped 48% to  Rs 975 crore in the quarter, against Rs 659 crore in the same period previous year. Revenue jumped 25.2% to Rs 6,378 crore for the quarter ended on June 30 from Rs 5,096 crore in the corresponding quarter last year. Nestlé India marked the fourth consecutive quarter of positive earnings surprise according to Morgan Stanley.

Broad-Based Category Growth

Nestlé witnessed high double-digit growth across its product groups and channels.

Prepared Dishes and Cooking Aids: This segment posted strong double-digit growth, led by focused innovations and sharper engagement with urban consumers, as well as rural reach expansion. Maggi continued its brand-building efforts through exclusive product drops and collaborations.

Beverages: Powdered and liquid beverages logged their 20th consecutive quarter of double-digit growth, aided by higher coffee penetration, premiumisation, and brand building. This volume-led growth was primarily driven by Nescafe Sunrise and Nescafe Classic, while Nescafe Gold delivered robust growth at the premium end.

Confectionery: The segment saw volume-led double-digit growth and continued to outperform the broader category. This was supported by strong penetration gains, premiumisation, and e-commerce growth.

Milk Products and Nutrition: While described by domestic brokerage HDFC Securities as a laggard, the segment returned to broad-based, double-digit growth.

Other Ventures: The Pet Food business achieved strong double-digit growth through portfolio expansion and wider distribution, while Nestlé Professional sustained robust momentum with double-digit, volume-led growth. NESPRESSO also expanded its footprint across Delhi NCR, Mumbai, and Bengaluru via boutiques, pavilions, and pop-up stores.

Nestle India Margin, Volume Growth
Photo Credit: AI-Generated via ChatGPT

Domestic business revenues grew 25% YoY. HDFC Securities estimated real internal growth for the domestic business at approximately 19%, alongside a 16% jump in volumes. Despite geopolitical tensions, exports saw a massive 35.6% to 36% YoY growth.

Outlook

Both brokerages noted that edible oil prices remain stable at elevated levels, while wheat and milk are expected to stay range-bound. They also agreed that the coffee crop is likely to normalise and be well-supplied, though short-term volatility could continue.

However, their views diverged slightly on other commodities. While Morgan Stanley stated that cocoa and sugar prices remain subdued, HDFC Securities highlighted that cocoa supplies remained under pressure due to erratic rainfall and sugar supply was constrained by lower-than-expected crop estimates.
 

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Brokerage Target Prices

Morgan Stanley: Rated the stock as "Equal-weight" with an "In-Line" industry view and set a price target of Rs 1,461.00. The global brokerage eyes a near-term upside for the FMCG stock over strong financials and volume growth

HDFC Securities: Maintained an "ADD" rating on the stock with a target price of Rs 1,600. The brokerage expects Nestlé India to continue delivering better growth than its listed peers due to structural initiatives, even though growth momentum is likely to taper from Q3 due to a high base.

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