Motilal Oswal's research report on Nestle India
NEST was witnessing sequential improvement in growth delivery, supported by the company’s own initiatives along with steady improvement in macros. GST rate reductions will further boost the FMCG sector from 3QFY26 onward. Favorable monsoon, easing inflation and other govt. measures will also boost demand. More than 85% of NEST’s portfolio has benefited from GST 2.0, though the transition is likely to take time due to old inventory in trade channel. Few more weeks will be needed to clear off the entire old inventory. After 22nd Sep, NEST has instructed its trade partners to sell even old inventory at the revised GST rate. Even price packs of old inventory have seen temporary MRP reduction to pass on the benefits.
Outlook
The stock is trading at 68x/58x FY26E/FY27E EPS. Given its expensive valuation, we reiterate our Neutral rating with a TP of INR1,300 (based on 60x Sep'27E EPS).
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