Nestle India Q2 net profit down 24% YoY to Rs 753 crore, beats estimates; double-digit sales growth across segments

Nestle India Ltd reported a 23.6 percent year-on-year decline in standalone net profit to Rs 753.2 crore for the July-September quarter of FY26, surpassing Street expectations. Revenue from operations rose 10.6 percent on-year to Rs 5,643.6 crore, driven by strong domestic demand and double-digit growth across most product segments.

A Moneycontrol poll had estimated Nestle India’s Q2 net profit at Rs 729 crore and revenue at Rs 5,307 crore.

The decline in profit was driven by a rise in input costs, with higher cocoa and milk prices weighing on margins. Operating expenses also climbed amid the ongoing  festive season.

On a consolidated basis, net profit fell 17 per cent to Rs 743 crore, while revenue was pegged at Rs 5,645 crore, up 10 per cent YOY.

Nestle India stock jumped over 3.3 percent post the earnings announcement, and was trading at Rs 1,262 on NSE in the early afternoon session.

Domestic growth at record high

The company’s domestic sales rose 10.8 percent year-on-year to Rs 5,411 crore -- its highest-ever quarterly level -- led by broad-based volume growth. Chairman and Managing Director Manish Tiwary said, “Three out of four product groups delivered strong volume-led double-digit growth.” He added that the recent Goods and Services Tax (GST) rate amendments are expected to stimulate consumption and affordability across product categories.

Meanwhile,  its pet food business reported high double-digit growth, achieving its highest turnover since its integration into the Nestlé India business. The company entered the pet food market through its 2022 acquisition of Purina Petcare India. In May this year, it acquired a minority stake in the Indian pet food company Drools.

Going forward, Nestle plans to focus on penetration-led volume growth strategy to ensure their presence across diverse geographies and platforms,
making its products accessible to consumers wherever they are.

"We will invest in growth by accelerating our investments in brands and manufacturing capacity, bringing forth innovations that are bolder, bigger, and better," Tiwary added.

Segment performance: strong show across categories

Nestle’s confectionery portfolio continued to deliver robust momentum, with KITKAT remaining the largest growth driver and gaining market share. India retained its position as the second-largest KITKAT market globally, aided by rural distribution expansion. MUNCH and MILKYBAR also posted high double-digit growth.

The powdered and liquid beverages segment recorded high double-digit growth, with NESCAFE leading the coffee category, gaining market share and increasing household penetration. The prepared dishes and cooking aids business delivered strong double-digit growth backed by accelerated volumes. The milk products and nutrition segment showed mixed trends.

Profitability and financials

Nestle India’s EBITDA stood at 22 percent of sales for the fiscal second quarter. Earnings per share were Rs 3.90 compared with Rs 3.88 in the same quarter last year, after excluding one-time divestiture income of Rs 290.8 crore that was booked as an exceptional item in the previous year. The net profit for the quarter, down from than in the same quarter a year ago, reflected the impact of the absence of exceptional gains.

Commodity outlook

The company said milk prices are expected to soften post-festive season as the flush season begins, while coffee prices may ease due to normal crop expectations in Vietnam and India. Cocoa supply-demand is likely to balance after recent corrections in demand, but edible oil prices are expected to remain firm amid tight global supply conditions.

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