Shares of FMCG company Nestle India fell by 2.2% to their day’s low of Rs 2,327 on BSE after the company on Thursday reported a consolidated net profit of Rs 899 crore for the quarter ended September 30, 2024, slightly down from Rs 908 crore reported in the same period last year.This marks a decrease of nearly 1% year-on-year. However, the net profit after tax was above the Street estimate of Rs 852 crore.The revenue from operations in the reported quarter stood at Rs 5,104 crore, reflecting a 1.3% increase compared to Rs 5,037 crore in the corresponding quarter of the previous financial year.On a standalone basis, the PAT for the reported quarter was Rs 986 crore, marking an 8.5% increase from Rs 908 crore in the same period last year.Post the update, here is how brokerages viewed the company’s quarterly performance:Motilal Oswal: Neutral | Target price: Rs 2,400Motilal Oswal has cut its EPS estimates for Nestle by 6% for FY25 and 4% for FY26 due to weak revenue growth and margin moderation. Nestle's focus on its Rurban strategy has driven higher growth in tier-2 and rural markets, benefiting from improved distribution penetration. Despite some margin volatility, the domestic brokerage firm expects GM to reach 57% and EBITDA margins to remain at 24-25% in FY25/FY26.Nuvama: Buy | Target price: Rs 2,870Nuvama maintained its ‘buy’ rating on Nestle while reducing the target price to Rs 2,870 from Rs 2,965 earlier.Nestlé’s Q2FY25 revenue (up 1.3% YoY)/EBITDA (down 4.7% YoY) disappointed versus Street’s and Nuvama’s forecasts. Domestic sales grew merely 1.3% YoY with a likely 1% YoY negative volumes, impacted by urban consumption slowdown, muted demand in Maggi Noodles (consumers shifting to salty snacks, biscuits) and infant nutrition. Nestlé may be expected to take corrective actions for its underperforming segments—leading to gradual recovery. Emkay Global: Reduce | Target price: Rs 2,400Emkay downgraded Nestle to a ‘reduce’ rating from an earlier ‘add’ with a target price of Rs 2,400.The downgrades came amid sustained topline pressures. Q2 result was weaker than the Street and Emkay’s expectations. Amid inflationary stress, Nestlé India’s core categories saw demand pressure. Factoring in a muted topline show in 1H, Emaky has lowered the revenue expectations by 3% over FY 25-27 and cut its earnings 8% for FY25E and 3% over FY26-27E.Also read: Manappuram Finance shares hit 15% lower circuit after RBI restrictions, multiple downgradesICICI Securities: Hold | Target price: Rs 2,350ICICI Securities maintained its hold rating on the stock while cutting the target price to Rs 2,350 from Rs 2,500.Nestle’s Q2FY25 revenue growth was disappointing, further de-accelerated to 1% YoY (vs 4% in Q1FY25) due to subdued consumer demand. Higher prices of key raw materials (cocoa, coffee etc.), margins are likely to remain under pressure but Nestle appears to have a market share gain opportunity given the relative immunity from cocoa inflation as its key brands have lower cocoa content vs competition. (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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