Target: ₹2,650
CMP: ₹2,551.15
Nestle India is among the prime beneficiaries of heightened consumer adoption of packaged foods. Current capex cycle of ₹6,400 crore for CY20-25 is likely to support the company in addressing segment demand more effectively.
Nestle’s thrust on penetration-led volume growth is helping it outperform sector volume growth. Strong pricing power is an added advantage and a likely factor of the faster margin recoup. Initiatives like ‘Nestle Health Science’ and the pet foods foray are likely to keep the company at the forefront. FY26 P/E of 64x largely factors-in its strong business fundamentals and superior execution.
Nestle India has maintained its steady valuation march on the back of improved execution post the Maggi crisis. Strong positioning in niche foods & beverages has aided Nestle in logging better margins, healthy returns, and low working capital. Incremental thrust would be to expand the addressable market, where M&A can be tapped.
We initiate coverage on Nestle India with a REDUCE recommendation and Mar-25 TP of ₹2,650, based on 65x Mar-26 earnings. Any consumption slowdown in the formal sector would be a downside risk, while Nestle India’s capability of utilising enhanced capacity ahead and driving innovation (aligning with Indian preferences) would be an upside risk.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.