Sharekhan's research report on Nestle India
Nestle India’s (Nestle’s) Q2FY2025 numbers were weak, missing estimates on all fronts. Muted revenue growth at 1.3% y-o-y along with 144 bps y-o-y decline in OPM and lower other income lead to 9.1% y-o-y decline in adjusted PAT. Domestic business performance was muted with a 1% y-o-y revenue growth versus expectation of 5-6% growth (we believe volumes to have declined in low-single digits). Commodity prices of coffee and cocoa are on elevated levels, while milk prices have been relatively stable. OPM to be under pressure in the coming quarters.
Outlook
Stock continues to trade at premium valuations of 71x/64x/57x its FY25E/FY26E/FY27E EPS, respectively. We maintain a Hold rating with an unchanged price target of Rs. 2,681.
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