No party lasts forever, and Nestlé India Ltd has had a good one lately. The packaged-foods company has seen four quarters of solid year-on-year revenue growth. While revenue growth (domestic plus export sales) has tapered from a multi-quarter high of 25.4% in the June quarter to 20.5% in the September quarter (Q2FY27), it is remarkable nonetheless. Growth in Q4, Q3 and Q2 of FY26 was 23.4%, 18.5% and 10.9%, respectively.
Q2FY27 revenue at ₹6,782 crore was supported by double-digit volume growth. But the stock fell 7.7% on Thursday after the broadly in-line Q2 results were out, and fell marginally again on Friday. Perhaps, investors are now noting that Nestlé India’s growth momentum could slow ahead, as the benefits of a low base and GST-led boost, start fading. Moreover, “Rising inflation, particularly food inflation, is a reality,” said the company.
This comes at a time when the entire FMCG sector is facing inflationary pressures arising from El Nino conditions and higher raw material costs triggered by the West Asia war. However, Nestlé could be relatively better-placed. “urban-centric diversified and premium-focused businesses such as Nestlé are likely to perform better,” said Manoj Menon, head of research and consumer analyst at ICICI Securities, adding, “Steady urban demand, product innovation, strong brands supporting price hikes and growing demand for premium products should help the company protect its gross margins from uncertain rural conditions.”
Nestlé India’s domestic sales grew 20.4% year-on-year in Q2FY27 to ₹6,515 crore, contributing 96% of revenue, while the rest came from export sales, which grew 22%. Confectionery products saw volume-led double-digit growth, led by market share gains in Kitkat, and momentum in Munch and Milkybar. Powdered and liquid beverages delivered volume-led growth. Prepared dishes and cooking aids saw strong growth, with Maggi noodles continuing to expand through rural penetration, while Maggi Masala-ae-Magic stayed focused on driving household penetration. Milk products and nutrition saw broad-based growth, led by investments in brand-building and portfolio optimization.
Ad spends have been a crucial ingredient for Nestlé’s growth.