Brokerage houses downbeat on Nestle India stock

Brokerage houses downbeat on Nestle India stock

Downbeat by FMCG giant Nestle India's decision to increase the rate of royalty to its Geneva-based parent Nestle SA prompted many brokerage houses like Religare and Goldman Sachs to downgrade the company's stock.

Religare slashed the target price assigned to Nestle India from Rs 5,000 to Rs 4,000 a share, while Goldman Sachs brought its target prices for the stock down from Rs 4,041 to Rs 3,952 a share.

ICICI Direct not only slashed the price from Rs 5,074 a share to Rs 4,993 a share, but also downgraded the stock from `buy' to `hold'.

Citi analysts Aditya Mathur and Jamshed Dadabhoy said in their report on Nestle India on Monday, "With moderate growth in the near term and rising competition, valuations are coming off."

However, Emkay Global Financial Services is still bullish on the company's stock. With a target price of Rs 5000 a share, Emkay recommended accumulate rating on the stock.

Last Friday, Nestle India increased the rate of royalty its pays to Nestle SA by 1.1 percentage points, from 3.4 per cent to 4.5 per cent.

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