Nestle India extends rally on stellar June quarter, higher costs may limit upside

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, ET BureauLast Updated: Jul 23, 2026, 06:30:00 AM IST

Synopsis

Nestle India shares reached a record high after a strong June quarter performance. Revenue growth accelerated significantly year-on-year, reaching 25.2 percent. However, operating margins moderated sequentially due to increased advertising investments. Exports also showed steady growth, driven by market penetration and product additions. The company anticipates continued healthy demand supported by premiumization and innovation.

ET Intelligence Group: Nestle India shares hit a record high on Wednesday following the FMCG major's stellar June quarter performance. The stock has gained about 6% over the past three months, outperforming the BSE FMCG Index, which has declined 3%.

Despite this gain, Nestle continues to trade at a trailing price-earnings (P/E) multiple of around 75, which falls within its five-year valuation band of 75-78. However, the stock may remain range bound in the short term. This is because while the June quarter financial numbers were robust year-on-year, operating margin before depreciation and amortisation (EBITDA margin) moderated sequentially, reflecting rising operating costs. Margin pressures could persist in the coming quarters amid higher advertising investments and uncertainty around commodity and pricing trends stemming from the ongoing West Asia conflict.

ET Bureau

Nestle India shares hit a record high on Wednesday following the FMCG major's stellar June quarter performance.

The company has consistently improved the year-on-year rate of revenue growth over the past few quarters. It improved to 25.2% in the June quarter compared with just over 1% in the September 2024 quarter. It also recorded the highest June quarter EBITDA margin of 24.2% in at least four years. However, it contracted sequentially from 26.3% in the March 2026 quarter owing to a continued rise in the investments in brands and advertising spend. This is despite accelerated operational cost saving measures by the company.

Exports have grown steadily to ₹2,902.2 crore in the June 2026 quarter from ₹1,844.7 crore in the June 2024 quarter driven by stronger international market penetration and product portfolio additions.

The company expects demand momentum to remain healthy, supported by premiumisation, deeper rural penetration, product innovations and continued traction in quick commerce.

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