Synopsis : Nomura has raised its target price on Nestlé India to Rs 1,675 from Rs 1,500, while reiterating its 'Buy' rating after the FMCG major delivered another stronger-than-expected quarterly performance. The brokerage said Nestlé India continues to outperform peers with broad-based growth across categories, although elevated valuations could limit near-term share price gains.
Third straight quarter of earnings outperformance
Nomura described the June-quarter performance as the company's third consecutive "blowout" quarter, with earnings exceeding market expectations across revenue, profitability and margins.
Standalone revenue increased 25.2% year-on-year, comfortably ahead of the street's expectation of around 19% growth. The brokerage attributed the performance largely to a 20% increase in volume and product mix, indicating that growth was driven by underlying demand rather than pricing alone.
Following the stronger-than-expected results, Nomura increased its earnings estimates for Nestlé India by 8.5% for FY27 and 7% for FY28.
Target price revised higher
Nomura has increased its target price to Rs 1,675, valuing the company at 65 times Q1FY29 estimated earnings, in line with its eight-year historical average valuation multiple.
The brokerage expects Nestlé India to deliver an 18.5% compound annual growth in earnings per share (EPS) between FY26 and FY29, supported by sustained revenue growth, expanding distribution and continued operational efficiencies.
Four strategic growth priorities
According to Nomura, Managing Director Manish Tiwary is focusing on four key strategic priorities to drive long-term growth:
- Customer-centric execution through micro-marketing initiatives.
- Distribution-led volume growth by expanding reach across India.
- Continued investment behind flagship brands such as Maggi and KitKat.
- Greater use of technology to improve sales execution and customer engagement.
The brokerage believes these initiatives should support sustained market share gains over the medium term.
India becomes the largest market for Maggi and KitKat
Nomura highlighted that India has now become Nestlé's largest global market for both Maggi and KitKat, reflecting the strength of its domestic franchise.
The company reported double-digit growth across all major product categories, while export revenue increased 35.6% year-on-year, despite geopolitical challenges affecting global trade.
The brokerage believes the broad-based category performance demonstrates the resilience of Nestlé India's portfolio.
Digital expansion continues
Nestlé India continues to strengthen its presence across digital channels.
According to Nomura, E-commerce and Quick Commerce contributed around 12.5% of total sales during Q1FY27, highlighting the growing importance of online consumption.
The company also expanded its rural distribution network to nearly 216,000 villages, supporting deeper market penetration and long-term volume growth.
Growth outlook remains positive
Although Nomura expects commodity inflation—particularly in cocoa and sugar—to remain a key monitorable, it believes Nestlé India remains well positioned to deliver industry-leading earnings growth.
The brokerage expects the company to continue outperforming most FMCG peers, supported by strong brand equity, premium product positioning and expanding distribution.
However, Nomura also cautioned that growth comparisons are likely to become more demanding from the second quarter onward because of a higher base, while premium valuations could moderate near-term share price performance.
Nestlé India share price performance
Nestlé India shares have gained more than 2% over the last five trading sessions.
The stock has delivered returns of approximately 4.4% over the past month, 12.4% during the last six months, and around 18.5% over the previous one year.
Conclusion
Nomura remains constructive on Nestlé India following another strong quarterly performance, raising its target price to Rs 1,675 while maintaining its 'Buy' rating.
The brokerage believes sustained volume growth, continued expansion across digital and rural channels, strong leadership in core brands such as Maggi and KitKat, and an expected 18.5% EPS CAGR through FY29 support its long-term investment case. While premium valuations and tougher growth comparisons may cap near-term upside, Nomura expects Nestlé India to continue outperforming the broader FMCG sector over the medium term.
Disclaimer: The stock rating, target price, earnings estimates, and business outlook discussed in this article are based on research published by Nomura and are presented solely for informational and educational purposes. They should not be construed as investment advice or a recommendation to buy, sell, or hold any security. Equity investments are subject to market risks, and brokerage projections or target prices are not guaranteed. Investors should conduct their own research and consult a SEBI-registered investment advisor before making any investment decisions.
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