Nestle India: Higher growth rates imperative to sustain high valuation

Nestlé India had a weak April-June quarter (Q1) of FY25 with meagre 3.3 per cent year-on-year (Y-o-Y) revenue growth, well below the long-term average of 14 per cent. The Gross Margin expanded 280 basis points (bps) Y-o-Y to 57.6 per cent but raw material prices are seeing inflation, with coffee, and cocoa prices at record highs, besides cereals and grains. Operating costs are up 11 per cent and Ebitda margin rose 40 bps to 23.3 per cent. The Ebitda grew 5 per cent Y-o-Y to Rs 1,120 crore.