Nestle India Q2 results impress brokerages with strong Maggi performance and easing input costs, but margin pressures keep ratings cautious. Here's what top global brokerages said.
Why Are Brokerages Divided on Nestle India After Q2 Results?
About Nestle India
Nestle India, one of the country’s leading FMCG players, reported healthy Q2 FY26 numbers with revenue growth of 11% YoY, driven by strong momentum across most product segments. Maggi, in particular, surprised analysts with robust performance amid easing input cost pressures.
HSBC: Hold | Target Price ₹1,260
Q2 revenue up 11% YoY. Three out of four segments, excluding milk, grew in double digits. Maggi was a key surprise, with cost inflation easing steadily.
Macquarie: Neutral | Target Price ₹1,200
Q2 EBITDA beat estimates as strong domestic sales offset margin pressure. The milk & nutrition segment, however, continues to be a drag on profitability.
Goldman Sachs: Neutral | Target Price ₹1,225
Q2 revenue growth remained strong, but gross margin fell 230 bps YoY while EBITDA margin contracted 100 bps. Margins likely to improve as input costs ease in the coming quarters.
Morgan Stanley: Underweight | Target Price ₹1,010
Revenue grew 11%, EBITDA up 5%, while PAT declined 2% YoY. Both gross and EBITDA margins were lower due to higher milk prices, though relief is expected as raw material costs soften.
Key Observations
- Strong performance across Maggi, beverages, and confectionery segments.
- Milk & nutrition continues to weigh on blended margins.
- Most brokerages expect input cost relief to aid margin recovery in H2 FY26.
- Valuations remain rich, prompting neutral to hold ratings despite steady topline growth.
For readers tracking FMCG performance and brokerage sentiment, Nestle remains a high-quality defensive play but near-term upside could be limited due to expensive valuations.
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Investor Takeaway
Nestle India continues to deliver resilient revenue growth despite temporary margin pressures. Analysts believe the easing of input inflation, particularly milk prices, could provide a tailwind to profitability in the upcoming quarters. However, valuations leave little room for multiple expansion. Investors should watch for sequential margin recovery and updates on rural demand trends.
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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.
