The report says that the expected moderation in milk prices, alongside its strong pricing power and efficiency initiatives, should partly offset cost headwinds
Underpinned by its dominant domestic franchise, continued innovation, distribution-led market penetration, capacity expansion, and increasing out-of-home consumption, Nestle India remains well-positioned for long-term growth, Axis Securities said in a report.
The report noted that while volatile commodity prices, especially in coffee, cocoa, and edible oils, may keep near-term margins under pressure, the expected moderation in milk prices alongside its strong pricing power and efficiency initiatives should partly offset cost headwinds.
On the business performance front, Nestlé India reported a modest 2.5 per cent year-on-year (YoY) revenue growth in the first quarter of the current financial year (Q1FY26), supported by robust double-digit growth in beverages and confectionery and a rebound in volumes for the Maggi noodles franchise. However, performance in the milk and nutrition portfolio was mixed.
“Consumption trends have strengthened in recent quarters, with urban markets sustaining momentum and several Rurban pockets turning positive. Notably, seven of Nestlé’s twelve power brands delivered double-digit growth, underscoring the breadth of recovery,” Axis Securities emphasised.
The report added that the powdered and liquid beverages segment remained a key growth driver, delivering strong double-digit growth on a high base. Confectionery posted high double-digit growth, driven by volume growth across major brands.
“We expect Nestle’s Sales, EBITDA, and profit after tax (pat) to grow at 10 per cent, 13 per cent, and 13 per cent compounded annual growth rate (CAGR) over CY22-FY27E, respectively,” the report highlighted.
Management expects key commodities such as coffee, cocoa, and edible oils to remain stable in the near term, while milk prices are anticipated to soften with the onset of the monsoon and flush season, providing a supportive backdrop for margins.
