Shares of Nestle India fell more than 5% on Thursday, October 15, after the company’s September quarter results met expectations across parameters.
For the September quarter, Nestle India reported a 36.4% year-on-year increase in net profit to ₹1,027 crore for the September quarter of financial year 2026-27, compared with ₹753 crore in the corresponding period last year. Revenue from operations rose 20.3% year-on-year to ₹6,788 crore.
The results were largely in line with the CNBC-TV18 poll, which had estimated net profit at ₹1,018 crore and revenue at ₹6,789 crore.
However, the street was anticipating a larger beat on the numbers, thereby triggering a sell-off on the stock. At the day’s low, the stock was down over 8%.
Earnings before interest, tax, depreciation and amortisation (EBITDA) increased 30.6% year-on-year to ₹1,615 crore from ₹1,237 crore. The EBITDA margin expanded to 23.8% from 21.9% in the year-ago quarter, exceeding the CNBC-TV18 poll estimate of 23.4%. The company’s domestic sales grew 20.4% during the quarter.
Commenting on the results, Manish Tiwary, chairman and managing director of Nestle India, said the quarter saw strong and broad-based growth across product groups, driven by robust double-digit volume growth. The company increased investments behind its brands, with advertising and marketing spends rising 46%.
“Rising inflation, particularly food inflation, is a reality,” Tiwary said, adding that Nestle India remained focused on innovation, brand investments, productivity and operational efficiencies to mitigate commodity cost pressures.
The management commentary around inflation is also something that left the street worried.
Product groups record broad-based growth
Nestle India’s confectionery business delivered another quarter of double-digit, volume-led growth, supported by market share gains in KitKat and sustained momentum across Munch and Milkybar.
The powdered and liquid beverages business also recorded strong volume-led growth, supported by household reach, affordability and premiumisation across its coffee portfolio. Prepared dishes and cooking aids reported strong growth, with Maggi noodles expanding through rural penetration.
The milk products and nutrition business saw strong, broad-based growth, supported by investments in brand building and portfolio optimisation. The pet food business also delivered strong double-digit growth, aided by consumer engagement on digital platforms and a focused route-to-market strategy.
The company said e-commerce continued to grow, led by quick commerce, while general trade recorded double-digit growth across town classes, with strong momentum in rural markets.
Input costs remain in focus
Nestle India said it would continue to focus on productivity and operational efficiencies to mitigate commodity cost pressures. In its commodity outlook, the company said coffee and wheat were expected to remain range-bound, while sugar and edible oils had stabilised at elevated levels. Cocoa remained volatile due to weather-related crop concerns in key producing regions.
Nestle India has been among the stronger-performing stocks in the fast-moving consumer goods (FMCG) sector so far and trades at around 49 times estimated FY28 earnings, according to the estimates shared earlier.
The Road Ahead For Nestle India
Nestle India now heads into the second half of the year with a high base of revenue growth and the current valuations leave limited headroom for further upside.
Shares of Nestle India are recovering from the lows of the day, now trading 4.34% lower at ₹1,323.1. The stock is flat on a year-to-date basis.