🔍 At a glance
Nestlé India — the FMCG godfather of your childhood snacks — posted strong profitability, jaw-dropping ROE of 83%, and a 79% dividend payout in FY25. But here’s the surprise: sales growth over the last 5 years? Barely 10% CAGR. Is India’s most trusted food brand becoming a slow-simmering stock in a pressure cooker market?
🏢 About the Company
- Parent: Nestlé S.A. (Switzerland) — owns 62.76%
- Brands: MAGGI, NESCAFÉ, MILKMAID, KITKAT, MILKYBAR, EVERYDAY, CERELAC
- Product Segments:
- Milk Products & Nutrition
- Beverages (Nescafé, Nestea)
- Prepared Dishes (Maggi noodles/soups)
- Chocolates & Confectionery (KitKat, BarOne)
With ~70%+ urban exposure, it’s an MNC FMCG beast that’s more about brand premium than mass penetration.
🧑💼 Key Management
- CMD: Mr. Suresh Narayanan (Fan-favourite in investor circles)
- Board: No big changes; seasoned and compliant
- Promoter Holding: Steady at 62.76%
- Meetings: Participated in BofA and Morgan Stanley investor meets (June 2025)
- ESG Rank: Released full BRSR report, penalties paid, governance stable ✅
📊 Financials Snapshot (CY20 to FY25)
| Year | Revenue (₹ Cr) | Net Profit (₹ Cr) | OPM % | EPS (₹) | ROE (%) | Dividend Payout |
|---|---|---|---|---|---|---|
| CY20 | 13,350 | 2,082 | 24% | 21.6 | 139% | 93% |
| CY21 | 14,741 | 2,118 | 24% | 21.97 | 150% | 91% |
| CY22 | 16,897 | 2,391 | 22% | 24.79 | 138% | 89% |
| CY23 | 19,126 | 2,999 | 23% | 31.10 | 153% | 56% |
| FY25 | 20,202 | 3,314 | 24% | 34.38 | 83% | 79% |
🧠 Insight: Despite subdued topline growth, EPS grew by 12.6% CAGR thanks to margin resilience and cost control.
📈 Stock Performance
| Period | CAGR |
|---|---|
| 10Y | 15% |
| 5Y | 8% |
| 3Y | 13% |
| 1Y | -5% |
CMP = ₹2,387
High = ₹2,778
Low = ₹2,110
P/E = 74.3
P/B = 56.3 🚨
🧮 Forward Fair Value (FV) Estimate
Assumptions:
- FY26 EPS = ₹38–₹40
- P/E Range = 55–60 (premium FMCG pricing)
➡️ Forward FV = ₹2,090 – ₹2,400
📌 CMP ₹2,387 is at the upper end of this range, suggesting it’s already priced for perfection.
📦 Segment Overview
- Milk Products & Nutrition: Dominated by Everyday, Cerelac
- Prepared Dishes: MAGGI still king
- Beverages: NESCAFÉ growth driven by new coffee formats
- Chocolates: KitKat rules, but discretionary slowdown visible
- New launches: Nutritious ready meals, premium chocolates, MILKMAID dessert kits
💰 Cash Flow & Balance Sheet Highlights
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Operating Cash Flow | ₹3,392 Cr | ₹4,175 Cr | ₹2,936 Cr |
| Capex (Investing CF) | ₹927 Cr | ₹1,237 Cr | ₹1,811 Cr |
| Dividend Paid | ₹2,436 Cr | ₹3,135 Cr | ₹1,848 Cr |
| Total Assets | ₹8,979 Cr | ₹10,523 Cr | ₹12,324 Cr |
| Debt | ₹271 Cr | ₹345 Cr | ₹1,167 Cr ❗ |
📌 Capex spiked in FY25 — expansion in greenfield facilities + supply chain.
🧨 Red Flags
- ❌ Valuation Bubble: P/E of 74 on <10% growth
- ❌ Revenue TTM Drop: -17% due to CY24 to FY25 transition (15-month FY)
- ❌ Cash Conversion Cycle Rising: Inventory days up from 83 to 139
- ❌ ROE Down: From 153% (CY23) to 83% (FY25) — partly due to rising capex and borrowings
- ❌ High Borrowing Surge: ₹1,167 Cr vs ₹345 Cr previous year
🧠 EduInvesting Take
“Nestlé India is like that rich NRI uncle who eats clean, wears Rolex, and earns slow but stable. Great to hang out with. But don’t expect him to do Zumba or skydiving. For now, he’s parking money in ₹34 Maggi cups and ₹74 KitKats — and asking you to pay 74x earnings to invest.”
🥊 Peer Comparison
| Company | P/E | ROCE (%) | Dividend Yield | Growth (5Y) |
|---|---|---|---|---|
| Nestlé India | 74.3 | 95.7 | 1.13% | 10% |
| Britannia | 61.7 | 53.0 | 1.29% | 12% |
| Zydus Wellness | 36.3 | 6.32 | 0.30% | 8% |
| Bikaji Foods | 97.6 | 18.1 | 0.13% | 17% |
💡 Nestlé = most stable, but least growth-intensive
🔮 What’s Ahead?
- ₹1,800+ Cr capex shows aggressive backend revamp
- Focus on premiumization of every category — Nescafé Gold, Maggi Chef, Milkybar XL
- Exports to Southeast Asia being scaled
- May enter infant health + plant-based snacking in FY26
📦 TL;DR
- MAGGI is eternal. But stock returns? Not so tasty lately
- EPS = ₹34.38, P/E = 74.3 → Fair value ₹2,090–₹2,400
- ROE 83%, Dividend Payout 79% → safe but slow
- Cash flows strong, capex high, debt rising
- Verdict: Perfect for SIP lovers. Boring for multibagger hunters.
Author: Prashant Marathe
Date: 12 June 2025
Tags: Nestlé India, Maggi, Nescafe, 5-Year Recap, FMCG Valuation, MNC Stocks, EduInvesting Style
