Nestle India Ltd
Nestlé India, established in 1959, is a subsidiary of Nestlé S.A. (Switzerland). It operates in the food sector, offering products in categories like milk and nutrition, prepared dishes, beverages, and confectionery. The company reaches consumers via distributors, retail, e-commerce, D2C platforms, and pharmacies. With eight factories and co-packing partners, Nestlé India delivers quality products across India and exports to 25 countries.
Key Business segments
Nestlé India’s business segments, based on the 9M 2023 data, are structured into four primary categories. Each segment encompasses specific product lines contributing to the company’s revenue and strategic focus:
Revenue Mix FY23
- Milk Products and Nutrition : 39%
- Prepared Dishes and Cooking Aids: 31%
- Confectionery: 16%
- Beverages (Powdered and Liquid): 14%
Shareholding Pattern
Financial Summary
| Particulars | Dec-23 | Mar-24 | Mar-25 |
| Sales | 19,126 | 24,394 | 20,202 |
| Sales Growth % | 13.19% | – | -17.19% |
| Expenses | 14,655 | 18,581 | 15,428 |
| Operating Profit | 4,471 | 5,813 | 4,774 |
| OPM % | 23% | 24% | 24% |
| Net Profit | 2,999 | 3,933 | 3,314 |
| EPS in Rs | 31.1 | 40.79 | 34.38 |
Synopsis of Financials
- In FY25, growth was impacted by a consumption slowdown, commodity inflation, urban-rural disparities, and geopolitical uncertainties.
- Rural market growth continues to outpace urban areas.
- In 9MFY25, domestic volume growth remained flat YoY, while net sales increased by 3%, led by price hikes. However, EBITDA and PAT declined by 4% and 9%, respectively, reflecting margin pressures.
Final Outlook
Nestle India (Nestle) hosted an analyst meet wherein the company highlighted its growth strategy, business moats and competitive positioning across the categories. Here are the key takeaways: Nestlé sees strong growth potential in India, as its per capita packaged food consumption remains low. With 60 million people expected to join the middle- and high-income segments by 2030, rising affordability will boost demand.
- Nestlé’s growth strategy focuses on efficiency, brand investment, and market share expansion to drive profitability. The company focuses on premiumization, which is outpacing the overall growth. Innovation contributed 6.5% of sales in 9MFY25, which Nestle aims to increase to 10% in the medium term. The company has a strong distribution network of 5.3 million outlets (1.7 million direct reach). It achieved 33% growth in ecommerce (8.5% of total sales).
- In 9MFY25, growth was impacted by a consumption slowdown, commodity inflation, urban-rural disparities (with rural outperforming urban), and geopolitical uncertainties. Domestic volume growth was flat YoY and sales grew 3% YoY, driven by pricing. Barring beverages, Kitkat, Milkmaid, and the toddler range, demand weakness was broad-based, particularly in noodles, due to pricing actions and competitive pressure from local brands. Volatility in coffee and cocoa prices remains a challenge, and further price hikes may be considered if inflation persists. GP margin contracted 60bp YoY to 56.9%, while EBITDA margin declined 160bp YoY to 23.3% in 9MFY25.
- Over the long term, Nestlé intends to focus on volume-led growth. We model a 9% revenue CAGR over FY25-27E, driven by rural expansion, out-of-home consumption, capacity expansion, and premiumization. However, there are near-term risks such as moderating urban consumption and high food inflation. The stock trades at 63x FY26E/56x FY27E EPS, and given its expensive valuation, we maintain a Neutral rating with a TP of INR2,400 (based on 60x P/E Dec’26E).
