Nestle India Profit Rises 36%, but Shares Slide Almost 8% on Inflation Worries

what happened

Nestle India said on Thursday that its standalone net profit rose 36% year on year to 1,027 crore rupees for the quarter ended September. Revenue climbed 20% to 6,788 crore rupees, helped by strong volume growth. The company credited the result to steady demand.

Still, the stock dropped 7.76% after management flagged food inflation and higher commodity costs. Managing director Manish Tiwary called inflation “a reality” and warned of “a challenging environment,” as edible oils, sugar and packaging materials become more expensive, squeezing margins across packaged food makers.

The company expects coffee and wheat prices to stay range-bound, while sugar and edible oils have stabilised at high levels. Cocoa remains volatile because of weather risks in key growing regions. Food regulator FSSAI has also sent Nestle notices over possibly misleading claims for NAN Excella and Lactogen Pro 1 infant food variants. The shares hit an intraday low of around 9% before recovering slightly. Advertising and marketing spending rose 46% in the quarter.

why it matters

For investors, the story is the gap between operating momentum and cost pressure. Strong demand still supports growth, but dearer raw materials and regulatory scrutiny over labelling could weigh on margins in coming quarters, which explains the sharp share reaction despite a profit gain of about a third.

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