Nestle slips 4% on muted Q4 volume growth

Jefferies was among the five brokerages that cut the Nestle India stock’s price target after spotting a near-term trend reversal at the FMCG major after industry-leading growth for several quarters.

However, the long-term outlook remains upbeat on the back of 5,000 crore planned capex, the broker said.

“Volume growth decelerated to a multi-quarter low at the time when margins climbed-up smartly,” Jefferies said in a client note. “The management attributed part of the volume slowdown to its price hike in Maggi LUP… this also resulted in share loss as competition stuck to existing price point,” it said.

Nestle shares fell as much as 4% on Friday before closing at 19,002 on the NSE, down 3.19% from the previous close. It was the biggest loser among the frontline stocks with over 2 lakh shares traded on the BSE and NSE, up nearly four times their one-month average daily volume, data showed.As many as 12 of the 31 analysts who reviewed Nestle India’s earnings retained their buy rating while 15 of them remain neutral.

On aggregate, analysts raised the consensus target by 1.89% to 20,881.77 apiece, showed a Bloomberg poll of analysts. This presents an upside of 10% from the current price.

Motilal Oswal also reiterated that Nestle India’s Q4 volumes witnessed pressure as it continued to face commodity cost headwinds.