Nestlé India profit rises 36%, but shares fall

Nestlé India Limited (NSE: NESTLEIND) reported Q2 FY27 standalone net profit of ₹1,026.8 crore, up 36.3% year-on-year. Revenue from operations increased 20.3% to ₹6,788.3 crore, supported by strong product demand and double-digit volume growth. Despite the strong numbers, the stock fell around 8% on October 15. That reaction deserves attention because it shows that good earnings do not automatically translate into positive stock performance. Nestlé India's EBITDA margin improved to 23.8% from 21.8% a year ago. The company has also seen strong demand across products such as Maggi, KitKat and Nescafé, supported by rural distribution and online channels. However, advertising and marketing expenditure increased 46%. The company is spending aggressively to support brands and maintain growth, while rising food inflation is creating fresh cost pressures. My reading is that the business remains healthy, but investors are looking beyond the current quarter. The key question is whether Nestlé can maintain volume growth and defend margins as input costs rise. The share-price decline, despite higher profits, also suggests that investors wanted a stronger outcome than the one delivered. I would not interpret a single day's fall as proof that the business outlook has deteriorated, but I would watch the next quarter closely. What I am watching next: - Whether EBITDA margin stays near 23% or higher in Q3 FY27. - Volume growth relative to revenue growth. - Whether advertising expenditure generates sustained incremental sales. - Management commentary on food inflation and pricing. Stance: Constructive on the underlying business, but cautious on the near-term stock setup until the market sees evidence that strong growth can continue without margin pressure.