Nestle India Shares Slide Up to 9% Even as Q2 Profit Jumps 36% to Rs 1,027 Crore

Nestle India delivered one of its strongest quarters in recent memory on Thursday, and the stock market responded by selling it. The maker of Maggi, Nescafe and KitKat reported a 36.3% rise in consolidated net profit for the September quarter, yet its shares dropped as much as 8.87% to Rs 1,260.50 on the NSE soon after the numbers landed.

The reaction says less about the quarter itself and more about what investors had already paid for.

The numbers

Consolidated net profit for July-September came in at Rs 1,026.77 crore, up from Rs 743.17 crore a year earlier, according to the company's regulatory filing. Revenue from the sale of products rose 20.45% to Rs 6,782.17 crore from Rs 5,630.23 crore.

Domestic sales, the bulk of the business, grew 20.4% to Rs 6,514.74 crore, while exports climbed 22% to Rs 267.43 crore. Chairman and Managing Director Manish Tiwary said the growth was broad-based across product groups and driven by double-digit volume growth, not just price increases.

Operating profit (EBITDA) rose about 31% to Rs 1,615.48 crore, with the EBITDA margin at 23.8%. Total expenses increased 17% to Rs 5,405.55 crore.

Why the stock fell anyway

On paper there was no miss. Analysts had pencilled in net profit of roughly Rs 1,022-1,034 crore and revenue of Rs 6,765-6,809 crore, so the reported figures landed squarely inside the expected range.

That was the problem. The stock had gained close to 6% in October alone and about 13% so far in the financial year, leaving little room for a result that merely matched forecasts.

Two details in the release also gave investors pause. Advertising and marketing spending jumped 46% during the quarter, a sharp step-up that supports volumes but eats into profitability. And Tiwary acknowledged that inflation, particularly in food, is a reality the company is dealing with. With key inputs under pressure and India's retail inflation at a 23-month high, the market read the comments as a signal that margins could tighten in coming quarters.

Tiwary said the company would respond through product innovation and renovation, sustained brand investment and a sharper focus on productivity and operational efficiency.

Off the lows, but still in the red

The selling eased as the session went on. By around 1 pm the stock had recovered to about Rs 1,329 on the NSE, still down roughly 4%, on heavy volume of more than 54 lakh shares. On the BSE it was trading near Rs 1,332.70, down 3.7%.

The fall came on a day when the broader market was rallying hard, with the Nifty 50 up about 1.7% around the 23,000 mark. That contrast underlines how stock-specific the selling was.

For context, Nestle India's 52-week range runs from Rs 1,159, hit on April 2, to Rs 1,553, reached on August 7. Even after Thursday's drop, the stock sits well above its yearly low.

What to watch

The key questions for the next few quarters are whether volume growth can hold up if the company has to raise prices to offset input costs, and whether the heavy ad spending translates into lasting market share gains. A strong festive season for packaged food would help on the first count. Further spikes in commodity costs would hurt on the second.

This is an original summary based on public reporting. See our editorial policy for how we source, write, and correct our stories.