Nestle India share price falls for sixth straight session. Should you buy the Maggi-maker’s stock after weak Q1 results?

Nestle India share price traded lower on Friday, extending its decline for the sixth consecutive session. Nestle India shares are down more than 6.6% in six sessions, while the stock has fallen 7% year-to-date (YTD).

Nestle India on Thursday reported Q1 results below street estimates on both revenue and profitability. The FMCG major’s net profit in the first quarter of FY25 was at ₹746.6 crore, a growth of 7% from ₹698.3 crore in the year ago period.

The Maggi-maker’s revenue from operations in Q1FY25 increased 3.3% to ₹4,814 crore from ₹4,658.5 crore, Yo, with domestic volume growth at 1%.

Nestle India reported EBITDA growth of 4.3% YoY at ₹1,103 crore, while its EBITDA margin increased by 20 basis points (bps) to 22.9% from 22.7%, YoY.

Here’s what brokerages have to say on Nestle India Q1 results and Nestle India shares:

Emkay Global

Brokerage firm Emkay Global sees driving real internal growth as the key ahead for Nestle India, whereas pricing needs to be balanced to drive structural growth. It cuts topline estimates by 3% for FY25, which flows to FY26-27. This, along with adjustments to margin and other income led to a 2-4% earnings cut over FY25-27E.

Given its execution prowess, price power, and strong parentage, Emkay Global maintains valuation multiple at 65x. Its stock valuation multiple of 63x for FY26E factors in superior structural growth in the business and its capability to sustain double-digit earnings growth momentum, which looks tough in the near term.

The brokerage firm maintains ‘Add’ rating on Nestle India shares on expectations of performance recovery, given execution prowess of the current management and strong parentage. It cut Nestle India share price target to ₹2,650 apiece for June 2025 from ₹2,700 earlier.

Nuvama Institutional Equities

Nestlé India’s Q1FY25 revenue and EBITDA grew 3.3% and 4.1% YoY, undershooting our and consensus forecasts. Domestic sales increased 4.2% YoY with a volume uptick of 1% YoY, adversely impacted by high food inflation and the heat waves, Nuvama Institutional Equities said.

It expects volumes to recover gradually. The brokerage believes near-term margins in coffee and chocolates could be weak, hence it cuts FY25E and FY26E EPS estimates by 2% and 1%. It has a ‘Buy’ call on Nestle India shares and cut the target price to ₹2,965 apiece from ₹3,010 earlier.

Motilal Oswal

There are no material changes to Motilal Oswal’s FY25 and FY26 EPS estimates. It believes Nestle India’s portfolio is relatively safe from local competition; thus, operating costs have not accelerated unlike its FMCG peers.

“We believe the company will be able to sustain its EBITDA margin at ~25% for FY25/FY26. The stock trades at expensive valuations of 67x/61x FY25E/FY26E EPS,” Motilal Oswal said.

It reiterated a ‘Neutral’ rating with Nestle India stock price target of ₹2,500 per share.

At 10:25 am, Nestle India shares were trading 0.41% lower at ₹2,470.30 apiece on the BSE.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.