1. Nestle India shares jump after lifting of Maggi ban, should you buy?

Nestle India shares jump after lifting of Maggi ban, should you buy?

Nestle share price climbed over 2 per cent on BSE in the early trade on Tuesday after Karnataka and Gujarat lifted ban on manufacturing and sale of Nestle India’s popular instant food brand Maggi noodles.

By: | Updated: October 20, 2015 4:20 PM
Nestle India shares

Nestle share price climbed over 2 per cent on BSE in the early trade on Tuesday after Karnataka and Gujarat lifted ban on manufacturing and sale of Nestle India’s popular instant food brand Maggi noodles.

Nestle share price climbed over 2 per cent on BSE in the early trade on Tuesday after Karnataka and Gujarat lifted ban on manufacturing and sale of Nestle India’s popular instant food brand Maggi noodles. According to an Indian Express report, the company is planning to relaunch Maggi noodles on this Diwali.

At 9.32 am, Nestle India shares were up 1.76 per cent at Rs 6,590. The scrip opened at Rs 6595 and had touched a high and low of Rs 6648 and Rs 6560, respecively in trade.

The share price of Nestle India settled 0.88 per cent up at Rs 6,533.40.

In a recent filing with stock exchanges, the company has reported that the test results from all three laboratories mandated by the Bombay High Court to test Maggi noodles samples are clear, with lead much below the permissible limits. The company further mentioned that it has conducted 3,500 tests representing 200mn packs in both national and international laboratories, and all their tests have been cleared.

Nomura is looking bullish on the further movement of Nestle India shares. The Japanese brokerage firm in a research report said, “This is a positive development towards the re-launch of the noodles, as Maggi can now commence manufacturing and selling its products after the newly manufactured products are cleared by the designated three laboratories. We maintain a ‘buy’ rating on the stock and believe that Maggi noodles should be seen on the shelves soon. The share price of Nestle India can touch Rs 6,950 in the next few quarters.”

The size of Maggi brand is around Rs 25,00 crore in sales, and contributes to around 25 per cent of the company’s total portfolio in terms of revenues.

In August 2015, the court had asked that Maggi noodles be newly tested in three independent labs in Hyderabad, Mohali and Jaipur. If the lead content would be within permissible limits, then Nestle would be free to manufacture and sell the noodles.

For the quarter ended June 2015, the company posted net loss of Rs 64.40, down 122.37 per cent, against net profit of Rs 287.86 crore in the corresponding quarter a year ago.

In the past one year, Nestle India share price jumped 12.27 per cent to Rs 6476.15 on October 19. The share price of the company was at Rs 5,768.15 on October 20 last year. Sensex jumped 3.54 per cent during the same period.

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