Brokerages mixed on Nestle India's Q3 performance; most cut EPS estimates

Most brokerages have cut earnings per share (EPS) estimates on Nestle India on the backdrop of moderation in growth momentum in the near term

Shares of Nestle India slipped 1 per cent in trade on Saturday (February 1, 2025), logging an intra-day low at Rs 2,286.3 per share, when the markets were open for a special trading session due to the Budget 2025 presentation. 

 

Around 9:37 AM, Nestle India share price was down 0.59 per cent at Rs 2,299.45 per share. In comparison, Sensex was up 0.25 per cent at 77,697.68. 

 

The selling on the counter came after the company reported its Q3 results on Friday, during market hours. Most brokerages cut earnings per share (EPS) estimates on the backdrop of moderation in growth momentum in the near term. 

 

 

Motilal Oswal has reiterated 'Neutral' rating on Nestle Indian with a target price of Rs 2,400 per share given its expensive valuation. The brokerage has cut its earnings per share (EPS) estimates by 3 per cent for FY25 and 4 per cent for FY26 on weak revenue growth and moderation in the margins.  

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Analysts at Motilal Oswal anticipate Nestle's Earnings before interest, tax, depreciation and amortisation (Ebitda) margin of 23.6 per cent for FY25 and 24.2 per cent for FY26. 

 

Antique Broking maintained 'Hold' on Nestle India and cut the target price to Rs 2,252 from Rs 2,563 per share. 

 

"Post the 3QFY25 performance and factoring moderation in growth momentum in the near term, we have cut our EPS estimates by 4 per cent over FY25-27E and cut our target multiple to 55x (previously 60x)," the report read.

 

Over the long term, the brokerage expects Nestle would be able to drive strong innovation and distribution-led growth.   Nuvama Institutional Equities has maintained a 'Buy' with a target of Rs 2,870 which they shall revist after analysts meet.  

"Although urban demand is challenging, we expect it to be temporary and likely to ease off over the next two quarters. Worst is behind for Nestle and sector in Q3FY25; Q4FY25 is likely to be sequentially better (due to full benefit of Price hikes while Q3FY25 saw partial benefit) and food Inflation has seen some cool off," the report read. 

 

As per Bloomberg data, BNP Paribas has maintained a 'Neutral' rating on Nestle and has raised the target price to Rs 2,420 from Rs 2,330 per share, Axis Capital has given a 'Sell' call with a target price of Rs 2,100 per share. 

 

Among the global brokerages, Citi has continued with a 'Buy' increasing the target price to Rs 2,800 from Rs 2,700 per share. Jefferies has maintained 'Hold' with a target of Rs 2,350, JP Morgan has iterated 'Overweight' with a target of Rs 2,450 and Morgan Stanley has maintained 'Underweight' with a target of Rs 2,033 per share.  

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Nestle India Q3 results 

In the third quarter, the fast-moving consumer goods (FMCG) major's profit rose 4.9 per cent year-on-year (Y-o-Y) to Rs 688 crore as compared to Rs 655.6 crore. 

 

The revenue of the company grew 3.9 per cent to Rs 4779.7 crore as compared to Rs 4600.42 crore a year ago. 

 

The maker of KitKat (chocolate) and Nescafe reported a 3.9 per cent increase in net sales to Rs 4,779.7 crore from Rs 4,600.4 crore in the year-ago period.

 

Nestle's beverages retail business crossed Rs 2,000 crore in the last 12 months, with Nescafe (coffee) strengthening its leadership position.

 

However, the company flagged a sustained challenging demand environment in the country.

 

“It was a quarter marked by food inflation and moderation in urban consumption, with a gradual recovery in rural consumption,” Suresh Narayanan, chairman and managing director, said in an earnings release. 

Nestle dividend 

The company's board approved a second interim dividend of Rs 14.25 per equity share of the face value of Re 1 each for the financial year 2024-25.