Nestle has sustained strong double-digit revenue growth momentum since Q2 FY26, supported by continued investments in brands, distribution expansion, and capacity augmentation. With a weak base gradually anniversaried, the brokerage believes growth rate can start moderating, on a double digit base from Q3 FY27 onwards. Besides, rising food inflation can taper down growth momentum going ahead.
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Motilal Oswal Report
Given Nestle India Ltd.'s rich valuation, Motilal Oswal reiterates its Neutral rating with a target price of Rs 1,350, based on 50 times P/E Sept'28E.
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The brokerage highlighted that Nestle has delivered superior growth over the last four quarters following GST 2.0, and it expects growth momentum to moderate on account of a high base, rising food inflation, and limited room for Ebitda margin expansion, which is already at ~24%.
Motilal Oswal models revenue/Ebitda/adjusted proift after tax compound annual growth rate of 11%/11%/12% over FY27-29E. The stock is trading at 52x/46x FY28/FY29 EPS.
Nestle India Q2 Results Highlights
Nestle India's net revenue grew 20% YoY (in line; 12% three-year CAGR) to Rs 6,780 crore. Domestic revenue grew 20% YoY to Rs 6,500 crore, primarily driven by volume growth.
Growth was broad-based for all four product segments, supported by robust performance across channels. General Trade registered strong double-digit growth across town classes, led by rural markets, while ecommerce continued its strong trajectory. Export revenue increased 22% YoY.
Gross margin expanded 260bp YoY but contracted 30bp QoQ to 56.9% (beat) amid broadly stable raw material prices. Ebitda margin expanded 160bp YoY to 23.8% (in line), supported by gross margin expansion and operational efficiencies. Ebitda grew 29% YoY to Rs 1,620 crore (in line).
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