Hold Nestle India: target of Rs 2400: ICICI Securities

ICICI Securities's research report on Nestle India

Over the last three decades, Suresh Narayanan’s tenure (ten years) as CMD of Nestlé India has been one of the most celebrated. Notable achievements: (1) steering it through the Maggi crisis and maintaining market leadership by rebuilding consumer trust, (2) doubling down on volume-led growth (~8%), driving revenue/PAT CAGR of 10%/ 12%, resulting in 18% TSR (vs. FMCG 12%), (3) accelerating growth in core brand with aggressive NPD (over 150 new products), thereby increasing contribution to 7% from 1.5% of sales, (4) expanding its retail footprint - especially in rural areas through the RURBAN strategy (adding 1.3mn retail outlets). Misses: (1) milk products and nutrition (a high-margin segment) underperformed due to weak volume growth (declined 1% CAGR), probably driven by reduced affordability

Outlook

We model revenue / EBITDA / PAT CAGR of 10% / 10% / 13% over FY25-27E. Maintain HOLD with a DCF-based target price of INR 2,400. Upside risk: Faster-thananticipated recovery in demand environment. Downside risk: Higher-than-expected inflation in key raw material prices.