Nestlé India closed the second quarter of the fiscal year with a 36% increase in net profit, supported by demand for packaged food products and the strong performance of brands such as Maggi and Nescafé. The result confirms the strength of consumption in certain categories in the Indian market, despite growing pressure on raw material costs and rising food price inflation. The group posted a net profit of 10,27 billion rupees, equivalent to approximately $108 million, while revenue grew 20% to 67,88 billion rupees, equivalent to approximately $714 million.
In the quarter ending in September, sales volumes recorded double-digit growth, primarily driven by the increased popularity of Maggi instant noodles in rural areas, the strengthening of sales through quick-commerce platforms, and the launch of new products under the KitKat and Munch brands. Reductions in consumption taxes and selective price increases also supported the FMCG market, allowing companies to partially offset rising production costs.
The economic environment, however, remains complex. Nestlé India, a subsidiary of the Swiss group, has reported growing pressure on the prices of packaging, edible oils, and agricultural commodities, factors that could impact profitability in the coming quarters. "Rising inflation, particularly food inflation, is a reality," said Chairman and CEO Manish Tiwary, emphasizing the challenges posed by rising commodity prices. In India, consumer price inflation reached 5,54% in September, approaching the upper limit of the central bank's tolerance band, partly due to tensions in the Middle East and an unfavorable monsoon season.
To address this situation, Nestlé India is focusing on product innovation, enhancing its existing offering, investing in brands, and more carefully managing costs. The goal is to maintain volume growth and strengthen its commercial presence, without excessively compromising margins in a period characterized by sharp fluctuations in raw material prices.
Despite the positive results, financial markets reacted negatively, with Nestlé India shares losing around 9% after the results were released. According to Abhishek Mathur, analyst at Systematix Group, earnings were broadly in line with forecasts, disappointing investors who had expected better-than-expected results. The prospect of slower revenue growth in the coming quarters could also weigh on valuations.
The Indian food sector is also seeing increasing regulatory attention on product safety and quality. The country is evaluating new warning labels for packaged foods and has intensified inspections of restaurant operations. Nestlé India has not commented directly on these initiatives, but Tiwary reiterated that food safety and quality are the foundation of consumer trust, elements considered central to the group's development strategy.
