The price of Nestle India's shares decreased on Friday, continuing its downward trend for the sixth straight day. Over the last six sessions, Nestle India shares have been down more than 6.6%, and the stock has decreased 7% year-to-date (YTD).
Nestle India released Q1 results on Thursday that were below than street projections for both sales and profitability. The FMCG giant's net profit increased by 7% to ₹746.6 crore in the first quarter of FY25 from ₹698.3 crore in the same time the previous year.
With a 1% increase in domestic volume, the Maggi manufacturer's operating revenue in Q1FY25 climbed 3.3% to ₹4,814 crore from ₹4,658.5 crore, Yo. Nestle India reported a 4.3% YoY rise in EBITDA at ₹1,103 crore, and a 20 basis point (bps) YoY improvement in EBITDA margin to 22.9% from 22.7%.
Brokerages' opinions on Nestle India's Q1 performance and shares are as follows:
Emkay Global, a brokerage company, believes that while pricing needs to be managed to support structural growth, fostering meaningful internal development is the key for Nestle India going forward. It reduces FY25 topline expectations by 3%, which carries over to FY26–27. This resulted in a 2-4% decrease in earnings over FY25–27E, coupled with modifications to margin and other income.
Emkay Global keeps its value multiple at 65x because to its solid parentage, price power, and execution expertise. Its excellent structural growth in the business and its potential to maintain double-digit profits growth momentum, which appears difficult in the short term, are factors contributing to its stock valuation multiple of 63x for FY26E.
Because of the present management's strong parentage and execution skills, the brokerage company continues to retain the "Add" recommendation on Nestle India shares, with the assumption that performance would return. Nestle India's share price objective for June 2025 was lowered from ₹2,700 to ₹2,650 per share.
Institutional Equities Nuvama
The Q1FY25 sales and EBITDA growth rates for Nestlé India were 3.3% and 4.1% YoY, respectively, below the market estimates.
Heat waves and high food inflation had a negative influence on domestic sales, which rose 4.2% YoY with a 1% YoY increase in volume, according to Nuvama Institutional Equities.
It anticipates a slow recovery in volumes. The firm lowers its projections for FY25E and FY26E EPS by 2% and 1%, respectively, citing concerns about potential negative near-term margins in coffee and chocolates. It has a "Buy" call on Nestle India shares and has lowered the target price from ₹3,010 to ₹2,965 per share.
Motilal Oswal
The FY25 and FY26 EPS projections from Motilal Oswal have not changed much. In contrast to its FMCG competitors, it feels that Nestle India's portfolio is comparatively protected from local competition, which is why operational expenses have not increased.
"For FY25 and FY26, we think the firm can maintain its EBITDA margin at about 25%. According to Motilal Oswal, the company is trading at a premium valuation of 67x/61x FY25E/FY26E EPS.
It maintained its "Neutral" rating and set a ₹2,500 share price objective for Nestle India's shares. Nestle India shares were down 0.41% at ₹2,470.30 a share on the BSE at 10:25 a.m.
