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Investing.com - CLSA downgraded Nestle India Ltd (NSE:NEST:IN) from Outperform to Hold on Friday, while lowering its price target to INR2,436.00 from INR2,695.00 following disappointing quarterly results.
The food giant reported first-quarter fiscal year 2026 sales growth of 5.9% year-over-year, meeting consensus estimates but falling 4% below CLSA’s projections. Domestic sales increased by 5.5% year-over-year, primarily driven by volume growth.
Operating profit underperformed expectations, coming in 16% below CLSA’s estimate and 10% below consensus forecasts. The earnings miss was attributed to higher material costs, increased operational expenses, and elevated finance costs.
CLSA has reduced its FY26-28 earnings estimates for Nestle India by 4-18% to reflect slower sales growth and higher finance and depreciation costs. The research firm noted that an anticipated recovery in baby products, expected due to a soft base and easier competition, has not materialized.
The downgrade was further justified by CLSA’s assessment that Nestle India’s valuation "remains demanding" given the company’s current performance metrics.
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