Nestle India Shares Drop Following BofA Downgrade of FMCG Stock

Nestle India Shares Dip After BofA Downgrade, Price Target Cut by 7.5% 📉

🏷️ Rating Downgrade: BofA Securities downgrades Nestle India from ‘neutral’ to ‘underperform’ and lowers its target price from ₹2,315 to ₹2,140 per share.
💸 Price Impact: Nestle India shares fall over 0.5% in Thursday’s session, with a potential decline of 4.2% from the last closing price of ₹2,234.
📊 Challenges Ahead: Sluggish demand, rising costs, and competition create a tough operating environment, impacting short-term growth.
📈 Growth Drivers: While pricing may continue to support growth, rising commodity costs (coffee, cocoa) affect 30% of Nestle’s portfolio.
🔮 Moderate Growth Expected: BofA forecasts modest volume recovery but expects overall growth to remain limited.
⚖️ Valuation Concerns: The brokerage suggests Nestle India’s high valuation relative to growth prospects may not be justified, lowering its earnings estimates by 3-5%.