Informist, Tuesday, Jul. 22, 2025

By Anand JC

NEW DELHI – Fast moving consumer goods behemoth Nestle India Ltd. is expected to report a mid-single digit growth in its top line for the June quarter largely due to price hikes taken because of input price pressures, especially in the beverages segment, according to analysts. The Maggi noodles maker will disclose its financials for the latest quarter Thursday.

Nestle India's net profit for the June quarter is expected to be INR 7.4 billion, marginally lower on year, according to the average of 13 analysts' estimates. Nomura Equity Research's estimate of INR 7.7 billion bottom line is the highest while Emkay Global Financial Services Ltd.'s forecast of INR 7 billion is the lowest.

Analysts expect Nestle India's revenue for the June quarter to grow nearly 6% on year to INR 51 billion. This growth would be stronger than the 4.5% registered in the March quarter and 3.3% in the year-ago quarter.

Growth of Nestle India's domestic sales likely outpaced growth in exports. Sales in India formed 96% of the company's overall top line in 2024-25 (Apr-Mar).

Kotak Institutional equities expects the Munch maker's domestic sales to grow 6.5% on year and export sales to grow 7%. In contrast, Motilal Oswal Financial Services expects a slower domestic sales growth of 5.5%, but a higher export sales increase of 10%.

Nestle India's earnings before interest, taxes, depreciation, and amortisation for the June quarter are expected to be INR 11.7 billion, according to the average of 13 brokerages' estimates. Its EBITDA is expected to grow nearly 4% on year but fall 17% sequentially.

DEMAND RECOVERY

Early commentary from FMCG companies suggests that demand in rural areas continued to recover in the June quarter. Demand in urban areas for consumer products still remains weak, but was much stable in the last three months.

Rural demand was driven by moderating food inflation and expectations of a bumper monsoon crop due to forecast of an above-normal monsoon, according to Nomura Equity Research.

In these conditions, Nestle India's domestic volumes likely grew only 2-3% on year during the June quarter, Nuvama Institutional Equities said. The company registered a domestic volume growth of 2% in the March quarter and of 1% in the year-ago quarter.

According to Nirmal Bang Equities, the company's sales volume has grown at an average of 4.6% over the last six years.

INFLATIONARY PRESSURES

Prices of key raw materials increased year-on-year in the last quarter, adding to consumer companies' troubles. For Nestle India, Kotak has forecast a gross margin contraction of 65 basis points on year to 57%, same as the 65 bps contraction in the March quarter due to inflation in coffee, cocoa, milk, wheat and palm oil prices. Coffee forms 13% of the company's overall raw material mix, while palm oil forms 11%.

Spot prices of crude palm oil increased 14% on year in the June quarter but declined 12% sequentially, Emkay said. Even more worryingly for the Nescafe maker, prices of Arabica coffee beans surged 64% on year in the latest quarter, even if they cooled sequentially. Coffee is part of Nestle India's powdered and liquid beverages segment which contributed nearly 14% to its total sales in FY25.

Nestle India likely hiked prices across categories by 3% in the June quarter, Nuvama said, mainly led by prices of its coffee and premium chocolates. The company had hiked prices by 2?ch in the March quarter and the year-ago quarter. "Growth (in revenues) is expected to be led by powdered liquid and beverages segment and confectionery, even as milk products/nutrition could continue to lag," Kotak said.

While growth in beverages' revenues was likely driven by price increases, Nestle India's milk products and nutrition segment faced challenges in mid-priced baby foods segment and competition from milk co-operative players, the brokerage said. Milk products and the nutrition segment contributed a little over 38% to the Cerelac maker's FY25 top line.

Tuesday, shares of Nestle India closed 1.2% lower on the National Stock Exchange at INR 2,443.50. Since reporting its March quarter earnings on Apr. 24, its shares have remained largely unchaged.

Of the 18 brokerage recommendations available with Informist on Nestle India, eight have a buy call, eight have a hold call, and two have a sell rating. Firms have issued a buy call at an average of INR 2,623 per share, reflecting an upside of roughly 7% per share.

Following are the Apr-Jun earnings estimates for Nestle India based on reports from 13 brokerages in descending order by the estimate of net profit:

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Edited by Akul Nishant Akhoury

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