What’s Fueling Nestlé India’s Strong Q2 Comeback as Brokerages Revise Targets?
Post 1 of 10 — Nuvama and Elara have issued new insights on Nestlé India following its Q2FY26 results. The company reported a 10.6% year-on-year revenue increase, marking its first double-digit growth in eight quarters. Domestic sales led the momentum with strong category performance and resilient pricing strategy.
Nuvama has reaffirmed its Buy rating on Nestlé India while revising the target price upward to ₹1,495 from ₹1,410. It expects margins to recover in the second half of FY26, supported by lower input costs and operating leverage benefits. Volume growth stood at 8% YoY versus 3% in Q1FY26, indicating robust domestic demand.
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The brokerage highlighted that gross margin contracted by 230 bps YoY and EBITDA margin dipped 97 bps YoY, reflecting mild input cost pressures. However, Nuvama remains optimistic on margin normalization in H2FY26, aided by stable raw material prices and operating efficiencies. The firm also raised FY27E/FY28E EPS estimates, citing roll-forward valuation and GST cuts as catalysts.
Meanwhile, Elara has upgraded its stance on Nestlé India to Reduce (from Sell) and lifted the target price to ₹1,262 (from ₹1,100). The brokerage sees positive momentum in chocolates, Maggi noodles, beverages, and pet food categories. Market share gains in KitKat and Munch, along with strong e-commerce traction, indicate a healthy consumer demand recovery.
Elara noted that Nestlé’s Q2 revenue rose 10.9% YoY, driven by product innovation and premiumization. While input costs such as milk, cocoa, and coffee remained stable, edible oil prices could stay firm. EBITDA margin stood at 20.9%, with gross margin declining by 220 bps YoY to 54.2%. FY27E/28E earnings have been raised by about 4% to reflect stronger sales outlook.
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Overall, Nestlé’s strong revenue rebound, improved category mix, and volume-driven growth point toward sustained brand strength. Brokerages expect margin headwinds to ease by early FY27 as input prices stabilize and rural demand recovers gradually.
Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, believes Nestlé India’s results reinforce the FMCG sector’s resilience amid inflation moderation. Investors should focus on sustainable volume recovery and raw material trends before scaling exposure. Read more analytical posts and guidance at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries
- How Is Nestlé India Balancing Margin Pressure With Volume Growth?
- Which FMCG Stocks Could Follow Nestlé’s Q2 Recovery Path?
- Will Input Cost Stability Sustain Earnings Momentum in FY27?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
