Target: ₹2,650

CMP: ₹2,551.15

Nestle India is among the prime beneficiaries of heightened consumer adoption of packaged foods. Current capex cycle of ₹6,400 crore for CY20-25 is likely to support the company in addressing segment demand more effectively.

Nestle’s thrust on penetration-led volume growth is helping it outperform sector volume growth. Strong pricing power is an added advantage and a likely factor of the faster margin recoup. Initiatives like ‘Nestle Health Science’ and the pet foods foray are likely to keep the company at the forefront. FY26 P/E of 64x largely factors-in its strong business fundamentals and superior execution.

Nestle India has maintained its steady valuation march on the back of improved execution post the Maggi crisis. Strong positioning in niche foods & beverages has aided Nestle in logging better margins, healthy returns, and low working capital. Incremental thrust would be to expand the addressable market, where M&A can be tapped.

We initiate coverage on Nestle India with a REDUCE recommendation and Mar-25 TP of ₹2,650, based on 65x Mar-26 earnings. Any consumption slowdown in the formal sector would be a downside risk, while Nestle India’s capability of utilising enhanced capacity ahead and driving innovation (aligning with Indian preferences) would be an upside risk.

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