# Nestle better insulated from cost inflation than rural-heavy rivals

> ICICI Sec analyst says Nestle benefits from urban demand while rural-focused rivals face cost inflation risks.
- Title: Nestle better insulated from cost inflation than rural-heavy…
- Summary: ICICI Sec analyst says Nestle benefits from urban demand while rural-focused rivals face cost inflation risks. Nestle India shares fall 8% as inflation…
- Keywords: nestle, icici securities, manoj menon, dmart, quick commerce, cost inflation, rural india, urban demand, fmcg, retail stocks, news, india
- Source: mint — https://livemint.com/market/mark-to-market/nestle-better-insulated-from-cost-inflation-than-rural-heavy-rivals-icici-secs-manoj-menon-11792069898168.html
- Author: Harsha Jethmalani,Pallavi Pengonda
- Published: 2026-10-16T00:31:00+00:00
- Read time: 2 min
- Topics: nestle, icici securities, manoj menon, dmart, quick commerce, cost inflation, rural india, urban demand, fmcg, retail stocks, news, india
## Nestle shares plunge 8%
Nestle India shares plunged 8% on Thursday amid growing worries of cost inflation.
## ICICI Securities analyst Manoj Menon
Manoj Menon, head of research and consumer analyst at ICICI Securities.
## Dabur and Emami exposed to rural risks
Dabur India and Emami are exposed to the risk of weak rural incomes.
## DMart margin pressure
DMart’s margin for Q2FY27 fell 30 bps year-on-year to 7.3% amid cost pressures and QC competition.
## 80% of DMart trade overlaps with QC
80% of DMart’s trade areas already overlap with quick commerce services.
## DMart store expansion challenges
DMart added 85 stores in FY26 to reach 500 stores but faces cannibalization and slow productivity.
## QC competition threatens DMart
Quick commerce companies are taking away frequent small top-up purchases due to convenience.
## DMart’s price advantage strategy
DMart should keep prices lower for weekly and monthly grocery shopping to retain value-conscious households.
## DMart store network expansion
DMart targets adding 15% more stores annually to reach underserved areas with lower operating costs.
## DMart’s digital strategy
DMart Ready focuses on scheduled delivery of large orders within six hours in profitable areas.
## Rural-focused retailers at risk
Value apparel retailers like V-Mart Retail face margin pressure due to high operating costs and discounting needs.
## Urban retailers more resilient
Large grocery discount retailers like DMart and mixed-format retailers like Vishal Mega Mart are more resilient to margin compression.
## Nestle better insulated from inflation
Nestle benefits from steady urban demand and strong brands that support price increases during cost inflation.
## Smallcap funds show strong inflows
Small cap mutual funds recorded a third consecutive month of robust inflows in September, drawing ₹ 9,038 crore.
## Key takeaway

Nestle India shares fall 8% as inflation concerns grow, but ICICI Securities' Manoj Menon argues diversified urban-focused companies like Nestle are better insulated from cost inflation than rural-heavy rivals.