Nestlé India Q4: Volume growth signals demand recovery even as profit falls 5%

Nestle Q4 FY25 Earnings

Nestlé India Ltd. reported a 5 percent year-on-year decline in net profit for the quarter ended March 2025, as elevated raw material costs continued to weigh on margins. However, signs of a recovery in consumer demand emerged, with the company registering volume growth of 2 percent during the quarter.

The FMCG major posted a net profit of ₹885.4 crore for the January–March quarter, broadly in line with analyst estimates. Revenue from operations rose 4.5 percent year-on-year to ₹5,503.8 crore, up from ₹5,268 crore in the corresponding period last year.

A Moneycontrol poll of 11 brokerages estimated that Nestle India is likely to report a 4.4 percent year-on-year rise in revenue at Rs 5,500 crore compared to Rs 5,268 crore reported in the same quarter last year. According to analysts, net profit for the January to March period was likely to fall nearly six percent to Rs 870 crore as against Rs 924 reported in the March quarter of the previous financial year.

Despite the earnings pressure, sales improved during the quarter. Domestic sales grew 4.2 percent to a record ₹5,235 crore, and total sales increased by 3.7 percent. Nestlé India Chairman and Managing Director Suresh Narayanan attributed the performance to a rebound in volumes, particularly in the core food and beverage categories, signalling a gradual recovery in underlying demand across urban markets.

The company reported high double-digit growth in its Powdered and Liquid Beverages segment, supported by NESCAFÉ’s expansion and deeper household penetration. The Confectionery business, led by Kit Kat, posted high single-digit growth, while the Prepared Dishes and Cooking Aids segment, which includes Maggi, delivered mid-single-digit growth alongside a return to volume expansion.

“Volume growth is a strong indicator of consumer resilience and improved sentiment in a challenging macro environment,” Narayanan said, adding that continued investments in innovation and distribution are helping drive market share across categories.

However, persistent cost inflation continued to pressure profitability. Nestlé cited elevated prices for key commodities such as coffee and cocoa, though it noted that cocoa costs had slightly corrected. Milk prices seasonally firmed up with the onset of summer, while edible oil prices remained largely stable.

The company declared a final dividend of ₹10 per equity share for FY25, with the record date set for July 4. If approved, the dividend will be paid out starting July 24. This comes in addition to interim payouts earlier in the year, reaffirming Nestlé’s shareholder-friendly approach even amid cost challenges.

Looking ahead, analysts expect a margin recovery to gradually take hold in the second half of financial year 2026, driven by a combination of easing commodity prices, potential rate cuts by the Reserve Bank of India, and fiscal support measures outlined in the Union Budget. However, these improvements are expected to materialise slowly and will depend on macroeconomic developments.

A recent report by Nuvama indicated that urban demand—which has been subdued due to high rental inflation and sluggish wage growth—is likely to remain soft until the first quarter of FY26. A more noticeable recovery is anticipated from the second quarter onwards, as policy tailwinds begin to translate into higher disposable income and improved consumption.

Nestlé India, with its robust brand portfolio and entrenched distribution network, remains well-positioned to capitalise on the expected demand rebound. But in the near term, managing input cost volatility and sustaining volume momentum will remain key focus areas for the company, the brokerage said.