Tubs of Nestle A+ Dahi, a Yoghurt Produced by Nestle India (Photographer: Vivek Prakash/Bloomberg)

Brokerages Cut Estimates For Nestle India On Higher Spend

Nestle India Ltd.’s share price fell 2.3 percent in early trade, after the fast-moving consumer goods maker’s margin fell to a six-quarter low on account of higher marketing spends.

Nestle India’s quarterly sales met estimates on the back of higher volume growth and new launches. However, the Maggi noodles and Kit-Kat chocolate maker’s bottomline missed estimates rising 9.6 percent year-on-year to Rs 342 crore.

Moreover, its margins fell to a six-quarter low. The management highlighted that the margin dent was on account of higher expenses related to advertisements and promotion. The quantum in increased spends towards the same hasn't been indicated.

Also read: Q4 Results: Nestle India’s Sales Meets Estimates Led By Higher Volumes

Here's what brokerages are saying on Nestle India:


  • Maintain ‘Outperform’, target price cut to Rs 11,500 from Rs 11,950.
  • Step up in A&P should be a good strategy, but disclosure can improve.
  • Nestle India soon needs to seek minority approval on royalty payout.
  • Cut calendar year 2018-20 estimates by 4-5 percent as we trim revenue and margin forecasts.

Credit Suisse

  • Maintain ‘Outperform’, Target price at Rs 12,300.
  • Sharp margin contraction due to spike in marketing spends.
  • Growth was volume led and broad based across the four key segments.
  • Cut our estimates by 2-3 percent as we build in higher marketing spends.

JP Morgan

  • Maintain ‘Overweight’, Target price at Rs 11,000.
  • Subdued fourth quarter dragged down by margin miss and no surprise on revenue growth.
  • Updates on royalty structure will be closely watched for.
  • We have currently built in broadly stable margins in CY19.


  • Maintain ‘Outperform’, Target price at Rs 12,994.
  • Numbers were below estimates on account of lower margins.
  • Domestic revenue growth was strong at 12 percent YoY, in line with estimates.
  • Believe higher A&P spend reflects management confidence in demand environment.