Nestle India stock rose in the morning trade on Wednesday after the FMCG major reported a strong Q4 FY26 results that beat Street estimates across key metrics. Shares of Nestle India Ltd were trading at Rs 1,421.6, up 3 percent in the morning session. The stock extended the previous day’s 7.3 percent surge following the results, and emerging as the top gainer on the Nifty.

The company reported a 26 percent year-on-year jump in standalone net profit to Rs 1,114.1 crore, sharply ahead of the CNBC-TV18 poll estimate of Rs 998 crore. Revenue grew 22.6 percent to Rs 6,748 crore, also beating expectations, while EBITDA rose 27.6 percent to Rs 1,773 crore. Margins expanded 110 basis points to 26.3 percent, defying expectations of contraction and coming in well above the poll estimate of 24.5 percent.

The strong performance was underpinned by broad-based growth across segments and a sharp acceleration in volumes. The company said it delivered its strongest quarterly growth in nearly a decade, supported by double-digit volume growth. It was aided by a nearly 50 percent increase in advertising spends. Total sales and domestic sales rose 23.4 percent and 23.1 percent, respectively, reflecting both higher penetration and premiumisation across categories.

Management said that disciplined resource allocation and execution supported growth, even as it stepped up investments in brand building. The ability to expand margins despite higher advertising spends also indicated tight cost control and operating leverage during the quarter, said analysts.

Brokerages positive on Nestle India's operating performance, but divided on valuation comfort

HSBC maintained a ‘Hold’ rating on Nestle India shares with a target price of Rs 1,410. It said that revenue beat estimates by 9 percent, and that cost control helped drive an 18 percent EBITDA beat despite higher advertising spends. The brokerage highlighted that three of four segments saw double-digit growth. It raised earnings estimates by 4-5 percent, but flagged that valuations remain rich.

On the other hand, Nomura retained a ‘Buy’ rating with a target price of Rs 1,500, citing broad-based strength in the quarter. It said that volume and mix grew around 20 percent, supporting a 22.6 percent rise in sales, while operating profit increased 28 percent year-on-year. The brokerage also highlighted margin expansion to 26.3 percent despite elevated advertising spends, indicating strong operating leverage.

Nestle India’s board has also approved a dividend of Rs 5 per share. The stock has gained about 18 percent over the past one year, outperforming the Nifty 50’s 0.9 percent rise over the same period.