Nestle India Q2 Results: Profit Falls 23% as Margins Contract

Nestle India Ltd. reported a double-digit decline in profit for the September quarter of the financial year ending March 2026. Standalone net profit for the quarter ending September fell 23.7% to Rs 752 crore from Rs 986 crore a year earlier, according to its notification to the exchanges on Thursday.

Revenue Rises 10% Year-on-Year

Meanwhile, revenue rose 10% year-on-year to Rs 5,644 crore, comfortably beating Bloomberg’s estimate of Rs 5,350 crore. The company’s domestic sales showcased robust performance, reaching Rs 5,411 crore, the highest ever recorded in any quarter.

Margin Contraction and Operational Performance

Margin saw a 120 basis point contraction and stood at 21.9% compared to 23.1% during the same period last year. Operationally, Nestle saw three of its four product groups posting strong volumes, which eventually led to double-digit income growth. The confectionery product, Powdered and Liquid Beverages, Prepared Dishes and Cooking Aids groups grew at a strong double-digit rate, driven by significant underlying volume growth.

For investors looking to invest in the FMCG sector, it’s essential to consider the impact of margin contraction on a company’s profitability. A decline in margins can affect a company’s ability to generate earnings and, subsequently, its stock price.

Outlook and Future Prospects

Going forward, Nestle India milk prices are expected to soften after the festive season, coinciding with the onset of the flush season. Coffee prices are anticipated to stabilise and may decrease as the upcoming crops in Vietnam and India appear to be normal. The global supply and demand for cocoa are projected to balance, primarily due to a correction in demand over the past two years, while edible oil prices are expected to remain firm and may rise further due to a tight supply and demand at the global level.

For investors interested in stock market news in India, it’s crucial to stay updated on the latest developments and trends in the market. This can help investors make informed decisions and navigate the complexities of the market.

Impact of GST Cuts on the FMCG Sector

Nestle India also acknowledged the recent GST cuts as a positive development for the company. The company stated that the recent amendments in the Goods and Services Tax (GST) rates announced by the Government of India is a positive step for consumers. It is expected to stimulate consumption, drive affordability, and contribute to the overall growth of the FMCG sector and the economy.

Investors looking to invest in Nestle India should consider the potential impact of GST cuts on the company’s revenue and profitability. A reduction in GST rates can lead to increased demand and, subsequently, higher sales for the company.

Conclusion

In conclusion, Nestle India’s Q2 results highlight the challenges faced by the company in terms of margin contraction and declining profitability. However, the company’s robust domestic sales and strong operational performance are positive indicators for the future. Investors should consider the potential impact of GST cuts and the outlook for the FMCG sector when making investment decisions.

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