Nestle Q1 FY26: Revenue up 6% YoY, profit margins hit by higher operational costs

Nestlé India has reported a 5.9 per cent year-on-year rise in revenue from operations for the quarter ended June 30, 2025, at Rs 5,096.16 crore, compared to Rs 4,813.95 crore in the same period last year.

On a sequential basis, however, revenue declined by 7.2 per cent from Rs 5,503.88 crore reported in the March 2025 quarter.

Total income for the quarter stood at Rs 5,100.2 crore, marginally down from Rs 5,512.32 crore in the previous quarter, but up 5.7 percent year-on-year from Rs 4,853.07 crore in Q2CY24.

Net profit, measured as total comprehensive income, declined sequentially by 27.7 per cent to Rs 645.65 crore, from Rs 893.61 crore in Q1CY25. Compared to the same period last year, profit was down by 13.7 per cent from Rs 747.7 crore.

Chairman and Managing Director Suresh Narayanan attributed the performance to balanced growth in three out of the company’s four core product categories—prepared dishes and cooking aids, powdered and liquid beverages, and confectionery, all of which returned to volume-led growth. Seven of Nestlé’s top twelve brands posted double-digit growth during the quarter.

However, the quarter was impacted by elevated consumption prices across commodities and increased operational costs due to recent expansions in manufacturing capacities. The company also faced higher finance costs owing to temporary borrowings from commercial banks.

In terms of category performance, the powdered and liquid beverages segment remained one of the strongest growth drivers, delivering yet another double-digit increase. The Nescafe brand gained additional market share and continued expanding its portfolio, particularly through affordable packs and premium offerings like Nescafe Gold and Nescafe Roastery. Ready-to-drink (RTD) formats also posted healthy growth.

The prepared dishes and cooking aids category saw a return to volume growth, with Maggi noodles registering double-digit expansion. Masala-Ae-Magic maintained its strong performance.

Confectionery grew at a high double-digit rate, backed by solid volume momentum. Kitkat led the category, especially in semi-urban and rural markets, while Munch and Milkybar also posted double-digit gains. Narayanan noted that confectionery brands within the portfolio have become increasingly digital-first and well-distributed.

The milk products and nutrition category posted mixed results, with some segments showing traction and others remaining muted. However, the company said improving underlying trends are visible in select areas.

Nestlé’s breakfast cereals portfolio saw high double-digit growth, boosted by the launch of Munch Choco Fills. The pet food segment also recorded robust performance, led by the cat product portfolio, particularly Purina Felix and Friskies. Strengthening market presence in major cities helped expand coverage. The company also introduced employee-focused initiatives like a staff pet feeding policy and pawternity leave.

E-commerce contributed 12.5 percent to domestic sales, driven by quick commerce and new product launches. The out-of-home business continued to grow in double digits and remains the fastest-expanding segment in the beverages and foods portfolio. Nestlé Professional reached a milestone of operating 1,000 Retail One kiosks across India under brands like Nescafe Corners, Maggi Hotspots, and Kitkat Break Zones.

Urban markets witnessed continued growth, while RUrban (rural-urban) regions also contributed positively, indicating a broader recovery in demand.

Reflecting on the company’s long-term growth, Narayanan noted that over the last ten financial years, Nestlé India has grown its revenue at a CAGR of 10.3 percent. Profits from operations as a percentage of sales expanded by 500 basis points, profit after tax rose 490 percent, and sales grew by 150 percent. Market capitalization grew 3.9 times, translating into a Total Shareholder Return (TSR) CAGR of 17 per cent.