Hold Nestle India; target of Rs 1301: Deven Choksey

Deven Choksey recommended hold rating on The Nestle India with a target price of Rs 1301 in its research report dated October 20, 2025.

Broker Research

October 20, 2025 / 10:02 IST

hold

26 Aug, 2025 12:21

Volume

Todays L/H

Deven Choksey's research report on Nestle India

Revenue stood at INR 56,436 mn, rising 10.7% QoQ and 10.6% YoY, above our estimate of INR 54,061 mn (+4.4% beat), driven by broad-based volume growth across categories and strong domestic momentum. Gross profit came in at INR 30,656 mn, up 9.1% QoQ and 6.1% YoY, slightly above our estimate of INR 30,329 mn (1.1% beat). Higher input costs in dairy and edible oils offset easing coffee prices. Gross margin compressed 230 bps YoY and 83 bps QoQ to 54.3%, tracking higher raw material costs and mix normalization. EBITDA at INR 12,366 mn grew 12.4% QoQ and 5.9% YoY, in line with our estimate of INR 12,372 mn. EBITDA margin moderated 97 bps YoY. PAT reported at INR 7,432 mn, up 14.9% QoQ but down 17.4% YoY, missed our estimate of INR 8,015 mn (-7.3% miss). PAT margin contracted 445 bps YoY but expanded 48 bps QoQ to 13.2%. Geographically, domestic sales grew 10.8% YoY, led by penetration-led volume gains across urban and rural markets, while exports delivered high double-digit growth, aided by strong demand for MAGGI, NESCAFÉ, and KITKAT across Middle East and Asia.

Outlook

We have also rolled forward our valuation to a Sep’27 basis and value NEST at 65.0x Sep’27E EPS. The stock currently trades at 81.3x/69.3x FY26E/FY27E EPS. We downgrade our rating from “ACCUMULATE” to “HOLD” as near-term headwinds, including margin pressure from the elevated input costs, are likely to constrain earnings momentum.

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