Nestle India Q2 Review — Topline Spurt Excites; Margins Still Subdued; Valuation Lofty, Says Systematix

Nestle’s revenue growth at 11% YoY – the highest in nine quarters and the first instance of double-digit growth in more than two years – was powered by volume growth of c.7% YoY (brokerage's estimate), albeit on a low base (volume decline of c.2% in Q2 FY25)..NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. .Systematix Report.We raise our FY26E-FY28E revenue estimates for Nestle India Ltd. by 1% but lower PAT estimates by 6-7% to factor in a protracted period of subdued margins, and build FY25-FY28E revenue/ PAT CAGR of 10%/9%. We maintain Hold rating on Nestle; We roll over valuation to September-2027E (from June-2027E) and value Nestle at a P/E of 65x, in-line with its long-period average, for an unchanged target price of Rs 1,250..We see significant positives emerging for Nestle, with-volume-led turnaround in the key Maggi portfolio,sustained strong growth in beverages and confectionery, andrecovery in key categories of milks and nutrition. However, we remain watchful of-consistency in volume growth delivery, volatile input-cost inflation andlofty valuations (stock trading at P/E of 71x on FY27E EPS). Product innovations should continue to support growth, punctuated by launches in breakfast cereals (Munch Choco Fills), RTD coffee, noodles (spicy range), millet-based foods (oats noodles), toddler foods, chocolates (KitKat variants) and pet foods. We remain positive on sequential gross profit margin benefits from-high pricing power in key categories supported by leadership positions, premiumization-led mix improvement (evident in confectionery, coffee) andinnovative product launches in new categories. .Click on the attachment to read the full report:.Nestle India Q2 Results: Profit Falls 23%; Margins Contract.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Nestle India Q2 Review — Topline Spurt Excites; Margins Still Subdued; Valuation Lofty, Says Systematix

The brokerage sees significant positives emerging for Nestle, hence maintains 'Hold' rating on the stock.

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