Nestle India Shares Fall 7% Despite 36% Profit Growth Amid Food Inflation and High Valuations

Nestle India shares plunged over 7% after the company reported a 35.9% year-on-year rise in consolidated net profit to ₹1,009 crore and 20.3% revenue growth. Despite the strong results, rising food inflation and persistent commodity cost pressures have raised concerns about future earnings. Sharad Avasthi, Head of Research (PCG) at SMIFS, explains why high valuations leave FMCG stocks vulnerable to sharp corrections, even after earnings growth. With several companies trading at elevated multiples and expected growth remaining moderate, can urban consumption provide the next trigger for the sector? The discussion examines Nestle’s stock reaction and the risks facing FMCG investors.