Nestle India Q2 FY26 Preview: Earnings to Reflect GST Impact and Moderate Growth Amid Stable Demand

All eyes are on FMCG major Nestle India Ltd as it will announce its Q2 FY26 earnings on Thursday. The quarter for the company is expected to have moderate revenue growth, steady margins, and a temporary disruption from GST rate rationalisation that came into effect on September 22, impacting trade channels across the FMCG sector.

Sector Update: GST Rate Change Hits Trade Channels, Weighs on Volume Growth

According to a report by Yes Securities, the GST rate cut led to temporary disruptions in distributor and retail supply chains as trade partners cleared old inventories and postponed new orders in anticipation of revised prices. This transitory effect is expected to weigh on volume growth across most FMCG companies during the quarter. Despite this, the staples segment is likely to deliver a modest performance.

However, increased advertising and sales promotion (A&SP) expenses, along with higher overheads, may limit overall margin expansion for FMCG players. The staples sector EBITDA margin is estimated at 24.2%, down 80 basis points YoY, resulting in a moderate EBITDA growth of 5.7%, lower than the topline expansion.

Nestle India Q2 FY26 Estimates

For Nestle India, revenue for Q2 FY26 is projected at Rs. 5,417 crore, showing a 6.1% year-on-year (YoY) growth, according to Yes Securities. The company's EBITDA is expected to come in at Rs. 1,219 crore, up 4.4% YoY, with an EBITDA margin of 22.5%. The adjusted profit after tax (PAT) is pegged at Rs. 756 crore, indicating a marginal 0.1% YoY growth.

Yes, Securities stated in its report, "We expect Nestle revenue to grow by 6% YoY driven by 5% domestic volume growth. Gross margins are likely to decline by 110 bps YoY to 55.5%. Savings in overhead spending would lead to an EBITDA margin contraction by 40 bps YoY to 22.5%. EBITDA and recurring PAT are likely to grow by 4.1% and remain flat on a YoY basis, respectively."

Recap: Nestle India Q1 FY26 Performance

In Q1 FY26, Nestle India reported a net profit of Rs. 646.5 crore, marking a 15.4% YoY decline from Rs. 764 crore in Q1 FY25. The company's total income rose 5.4% YoY to Rs. 5,100.2 crore, though sequentially it was down 7.5%.

Domestic sales climbed to Rs. 4,860 crore, while export sales improved to Rs. 213.9 crore, reflecting steady global demand. EBITDA for the quarter was Rs. 1,100 crore, largely flat YoY, with margins narrowing to 21.6% from 22.9% a year ago.

Nestle Share Price Today

At the end of Wednesday's trading session, Nestle India shares closed at Rs. 1,222.30, with a strong gain of Rs. 46.80 or 3.98% for the day. The stock has edged up 0.81% over the past month. However, on a year-to-date (YTD) basis, Nestle India has delivered a solid performance with a 12.69% rise. Yes Securities maintained a 'Neutral' rating on the stock with a target price (TP) of Rs. 1,175, with limited near-term upside

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