Nestlé India posts strong Q1, flags commodity cost risks
The FMCG major reported a sharp jump in June-quarter profit and revenue on broad-based growth across categories and channels, but warned that cocoa, sugar and other raw material costs remain key risks.
Nestlé India reported a sharp rise in June-quarter (Q1FY27) profit and revenue, driven by broad-based growth across product categories and channels, while warning that commodity costs and El Niño-linked supply risks remain key watchpoints.
Shares of the maker of Maggi noodles and KitKat chocolates rose as much as 3.94% to a 52-week high of ₹1,509 on the National Stock Exchange on Wednesday after the company reported a sharp jump in earnings.
Standalone net profit climbed 47.9% year-on-year to ₹975 crore in the June quarter, while revenue from operations rose 25.1% to ₹6,378 crore, the company said in a stock exchange filing on Wednesday.
Nestlé said sales growth was led by strong volumes, but did not quantify the volume growth.
“All four product groups delivered strong double-digit growth, supported by high double-digit growth across channels,” Manish Tiwary, chairman and managing director of Nestlé India, said in the filing.
Analysts at Nuvama Institutional Equities expect FY27 volumes to grow 20% year-on-year.
Quick commerce boost
General trade posted strong double-digit growth across town classes, with rural markets leading the momentum, the company said. It expanded rural distribution touchpoints during the quarter, strengthening its direct reach.
Quick commerce also emerged as a key growth driver, supported by improved product availability and a more tailored, platform-specific pack portfolio across relevant categories.
At the category level, powdered and liquid beverages recorded their 20th consecutive quarter of double-digit growth, led by volume gains in Nescafe Classic and Sunrise, alongside robust growth in the premium portfolio led by Nescafe Gold. The ready-to-drink business also scaled rapidly during the quarter, the company said.
The confectionery business, including KitKat and Munch, delivered another quarter of volume-led double-digit growth, supported by premiumization and e-commerce.
The Prepared Dishes and Cooking Aids business, including Maggi, reported gains in market share and penetration during the quarter. The pet food business also posted strong double-digit growth and introduced new products in the cat-food segment.
Earnings before interest, taxes, depreciation and amortization (Ebitda) rose 39.8% to ₹1,538 crore, while Ebitda margin expanded to 24.2% from 21.6% a year earlier.
Cost pressures persist
Even as demand remained strong, Nestlé flagged raw material costs and weather as key risks to monitor.
The company said challenges in raw material procurement due to El Niño remain a key monitorable. Cocoa prices have been affected by erratic rainfall across key producing regions, while sugar prices have strengthened because of lower-than-expected crop estimates, “with uneven monsoon conditions linked to El Niño posing a risk to the next crop,” the company said.
Nestlé added that edible oil prices remain stable at elevated levels. Wheat and milk are expected to remain range-bound, while the protein complex, including dairy-based proteins, continues to face inflationary pressure as demand from nutrition and protein-fortification trends outpaces supply expansion.
“We are not expecting a price hike, but a quantity (grams) reduction in products--shrinkflation,” said analysts Aniket Salunke, Yash Mitkar, and Foram Thosani at Sunrise Gilts & Securities.
“Recently, Maggi reduced 7-9% quantity in almost all their packets. Due to rising inflation, we expect the margins to fall as palm oil is imported and the company does not increase the price,” they added.
Analysts at Nuvama said they expect most staples companies to report very strong numbers in both Q1 and Q2 and do not see significant risks from El Niño for the second half of FY27 at this stage.
About the Author
Neethi Lisa Rojan
Neethi Lisa Rojan is a senior correspondent focusing on the consumer goods and retail sector working from Mumbai for Mint since 2026. She has been a journalist for a little over two years with Moneycontrol and The Morning Context. She has covered the consumer and healthcare sectors in earlier roles. She was a double gold medallist during her bachelor’s from Mahatma Gandhi University Kerala and post-graduation from Pondicherry University. With a background in commerce and journalism, she brings a sharp analytical lens to stories on India’s fast-evolving consumer goods and retail sector.
With an academic background in business administration and a keen eye for financial statement analysis, she bridges the gap between corporate data and compelling narrative journalism. Her reporting is characterized by a focus on how evolving consumer behaviours and regulatory changes impact India's largest mass-market brands. She is a keen learner with diplomas in international business, human rights and journalism. She specialized in business journalism at the Asian College of Journalism, Chennai. When she is not looking into shopping carts, you can find her explaining the latest conspiracy theory.
Source: Livemint — Companies
