Motilal Oswal has retained its ‘Neutral’ stance on Nestlé India, assigning a target price of ₹2,400, implying a modest upside of about 3.6% from the current market price of ₹2,316. While revenue performance was broadly in line with expectations, margin performance disappointed, prompting the brokerage to revise down earnings estimates marginally.
According to Motilal Oswal, volume growth remains modest, estimated to be in the low single digits, and was visible across all segments except Milk Products and Nutrition. The company faces profitability challenges at the start of FY26, primarily due to elevated raw material inflation and increased manufacturing costs.
The report notes that input costs for coffee, cocoa, and edible oil are expected to stay range-bound, while milk prices may ease, offering some cushion. However, urban consumption slowdown and high food inflation continue to pose significant downside risks to near-term performance.
While the company’s capacity expansion plans are expected to support long-term growth, short-term margin pressure remains a concern. As a result, Motilal Oswal has cut its EPS estimates by 4% for FY26 and 1% for FY27.
The brokerage maintains that until margin concerns ease, Nestlé India’s risk-reward remains balanced, warranting a neutral rating.
Disclaimer: The views and investment recommendations expressed in this article are those of Motilal Oswal Financial Services and do not represent the opinion of this publication. This is not a stock recommendation. Investors are advised to consult certified financial advisors before making any investment decisions.
