Prabhudas Lilladher keeps Accumulate on Nestle India, lifts target to Rs 1,526

what happened

Analysts at Prabhudas Lilladher, as reported by Moneycontrol, described Nestle India's results for the second quarter of fiscal 2027 as broadly in line with their expectations. Volume growth stayed robust during the period, gross margins held steady despite a costly raw-material basket, and sales of Maggi, chocolates and beverages all rose across the board.

Revenue climbed 20.3% year on year and EBITDA rose 30.5%, while the EBITDA margin widened by 187 basis points on the back of operating leverage and lower staff and input costs. The brokerage expects growth to slow in the second half of the year as the comparison base becomes tougher, and it sees inflation weighing on demand from the third quarter. Its forecasts leave out any hit to demand from El Nino.

Margin room looks limited, the report notes, given swings in sugar, cocoa and palm oil prices and the risk of a severe El Nino globally. The firm projects 16.4% EPS compound annual growth over FY26–29E and values the stock at 51.3 times FY28E and 45.7 times FY29E earnings. Its DCF-based target is Rs 1,526, up from Rs 1,514, and it keeps an Accumulate rating.

why it matters

For the market, the premium multiple caps upside: even with a constructive operating outlook, the brokerage sees only steady returns over the medium term. Sugar, cocoa and palm oil costs, along with how an El Nino scenario unfolds, are the main variables to watch.

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