Near-term recovery, margin expansion key for Nestle India

Nestle India reported a 5.9 per cent year-on-year (Y-o-Y) revenue growth in the first quarter of financial year 2026 (Q1FY26) with domestic sales up 5.5 per cent.

- DEVANGSHU DATTA

The management said that except for the milk products and nutrition, all other categories recorded volume growth. Out of the top-12 brands, seven grew at double digits. Export revenue grew 16 per cent Y-o-Y, driven by foods, coffee, instant tea, and breakfast cereals.

The gross margin contracted 250 basis points (bps) Y-o-Y (down 100 bps Q-o-Q) to 55.2 per cent due to high commodity prices. Management indicated that coffee, cocoa, and edible oil prices are expected to remain range-bound, while milk prices may ease down. The operating profit margin contracted 130 bps Y-o-Y to 21.9 per cent, the lowest in the last 12 quarters. The powdered and liquid beverages category remained a key growth driver, with high double-digit growth.