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Maggi-maker Nestle turns positive on India market but CLSA expects downside in shares

Maggi-maker Nestle turns positive on India market but CLSA expects downside in shares

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By Kanishka Sarkar  Sept 28, 2022 12:45:26 PM IST (Updated)

Nestle India shares were trading in the green on Wednesday even as brokerage firm CLSA has a sell call on the firm. This is days after the world’s largest food company announced its ambitions to invest Rs 5,000 crore in India by 2025.

Nestle India shares were trading in the green on Wednesday, September 28, even as brokerage firm CLSA has a sell call on the makers of Maggi, an Indian pantry staple and one of the country’s most-loved brands. This is days after the world’s largest food company announced its ambitions to invest Rs 5,000 crore in India by 2025.

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Nestle India shares gained almost a percent in intraday and were trading 0.8 percent higher from the previous close at Rs 18,828.50 on BSE at 11:35 am. In 2022 so far (year-to-date), the FMCG stock has erased more than 17 percent of investors’ wealth as against the benchmark Sensex, which has slipped 3.6 percent during the period.
CLSA expects the shares of the firm to further decline over 5 percent from Tuesday’s closing as it has set the target price of Rs 17,625 per share.
The brokerage feels that given the pressures in Europe and China, Nestle’s parent firm is turning positive on India operations. The firm is looking to expand its addressable population with a widening portfolio, it said.
Earlier this week, Nestle CEO Mark Schneider told Storyboard18 that the parent firm wants to invest Rs 5,000 crore capex in India by 2025 for research and development (R&D) and boosting capacity.
The fresh investments will help the company accelerate its core business in the country and leverage new opportunities for growth in well-established and emerging categories.
Schneider announced this during his second visit to India since joining the Swiss-based foods and beverage major in 2017. It was also his first global market visit since the COVID-19 pandemic hit as well as the first meeting of the board of directors in an international market. The meeting hints at India’s significance and impact on Nestle’s global scheme.
At present, 99 percent of what Nestle sells in India is made in India. Nestle owns over 2,000 brands globally and is the maker of iconic household brands such as Nescafe, Milkybar, Milo, Kit Kat, Bar-One, Milkmaid, and Nestea.
Nestle has been present in India for over a century. Schneider said that in the last 60 years since Nestle began manufacturing in India, it has invested over Rs 8000 crore in its operations here.
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