Nestle India tumbles 4%, nears 52-wk low as BoFA downgrades to Underperform

Nestle share price: FMCG giant Nestle India shares were under pressure on Wednesday, April 2, 2025, as the stock slipped up to 3.67 per cent to hit an intraday low of ₹2,150, approaching its 52-week low of ₹2,115.

 

At the time of publishing the report, Nestle India share was the top loser on 30-share BSE Sensex.

 

The decline in Nestle's share price came after reports suggested that global brokerage firm BoFA Securities has downgraded the stock to ‘Underperform’ from ‘Neutral.’ Despite this, the target price was maintained at ₹2,140.

 

BoFA analysts reportedly stated that Nestle’s valuations are high in light of its growth outlook and the performance of its peer group. Currently, Nestle India’s price-earnings (PE) ratio stands at 63.07. 

 

As a result, analysts have reduced their earnings forecast by 3-5 per cent, factoring in recent trends and cost push. 

Although a modest volume recovery is anticipated (due to a low base), analysts believe, overall growth is expected to remain limited.

 

Additionally, analysts foresee major changes in Nestle’s portfolio over the next 3-5 years, stressing upon the need to address portfolio gaps and adapt to evolving consumer preferences.

 

That said, in a separate report dated February 20, domestic brokerage firm Geojit noted that Nestle has been investing in capacity expansion since 2020, particularly for Maggi, coffee, and chocolate, to support its long-term volume growth objectives. 

 

The company's RUrban strategy is expected to strengthen its position in rural markets by optimising the number of outlets, allowing deeper penetration through product portfolio, price points, and purchase frequency. 

 

“Premiumisation, investments in R&D, newly introduced products, up-trading, digital channels and geographical opportunities are expected to drive volume and revenue growth in the future. Therefore, we retain our ‘Hold’ rating on the stock with a rolled-forward target price of ₹2,390, based on 57x FY27E P/E,” Geojit said, in a note.

 

What to expect from Nestle in Q4FY25 results?

 

Ahead of Q4 results, a report from Nuvama suggested that analysts expect consolidated revenue to grow 5 per cent Y-o-Y (compared to 3.9 per cent in Q3FY25 and 9.3 per cent in Q4FY24). 

 

Domestic sales are expected to increase 5-6 per cent Y-o-Y (up 3.3 per cent in Q3FY25; 8.9 per cent in Q4FY24), with domestic volumes projected to grow 3 per cent Y-o-Y (up 2 per cent in Q3FY25; 5 per cent in Q4FY24). Overall demand trends have shown marginal recovery in urban areas, although a slowdown still persists, analysts said.

 

Meanwhile, the export revenue is likely to grow 7 per cent Y-o-Y (compared to 21.2 per cent growth in Q3FY25, which was a one-off, and 19 per cent growth in Q4FY24).

 

Analysts at Nuvama also expect gradual price hikes of around 2 per cent in Q4FY25 (~1 per cent in Q3FY25; ~4 per cent in Q4FY24), mainly driven by coffee, with price increases seen across various portfolios (e.g., Maggi recently raised the price of the 70gm pack from Rs 14 to Rs 15).

 

Moreover, Ebitda is expected to grow 2.6 per cent Y-o-Y, driven by a high base (up 0.4 per cent in Q3FY25; 20.5 per cent in Q4FY24). Given inflationary pressures on cocoa, coffee, and palm oil costs, analysts believe, gross/Ebitda margins are likely to decline 20bps/59bps Y-o-Y to 57 per cent/24.8 per cent.

 

With the urban slowdown expected to ease by Q2FY26, demand trends are anticipated to improve further from this point onward, Nuvama added.

 

At 12:02 PM, Nestle India shares were off day’s low, and were trading 1.48 per cent lower at ₹2,199. In comparison, BSE Sensex was trading 0.51 per cent higher at 76,408.67 levels.