Nestle India gains 3% in subdued market; trades at four-month high level

The country's largest food company, Nestle India, is planning to avail the Union government's production-linked incentive scheme to boost exports.

Shares of Nestle India were in focus, hitting four-month high of Rs 17,500, up 3 per cent on the BSE on Friday in otherwise subdued market. The rise comes on expectation of higher growth by the company going forward. The stock of packaged foods company was trading at its highest level since July 2020. It had hit a record high of Rs 18,301 on April 17, 2020. In comparison, the S&P BSE Sensex was trading flat at 43,600 points at 11:06 am.

Boosted by an increase in home consumption, the company’s key brands like Maggi Noodles, Maggi Sauces, Kitkat, Nestlé Munch, Nescafe’ Classic & Nescafe Sunrise witnessed double digit -growth during July-September 2020 quarter (Q3CY20).

The demand in ‘Out of Home’ channels improved during the quarter but continues to be impacted due to the overall environment. The company continued strong performance in the e‐commerce channels, which grew by 97 per cent and contributes about 4 per cent of domestic sales. Nestlé recently began a new phase of expansion with its board approving Rs 2,600 crore of investment budget till 2024.

"A deep-dive in Maggi showed management’s big appetite for Maggi. The strong recovery has been led by several initiatives to address different taste preferences, create occasions and meet new out-of-home and in-home consumption needs. Management highlighted its focus on getting the core portfolio back and ensuring a healthy supply chain after Covid-19-led disruption, which has driven its recovery to double-digit growth in Q3," analysts at Emkay Global Financial Service said in result update.

Meanwhile, according to a Business Standard report, Nestlé India, is planning to avail the government’s production-linked incentive (PLI) scheme to boost exports and awaits finer details of the flagship scheme. According to Nestlé India chairman and managing director, Suresh Narayanan, aligning the scheme’s objectives with Nestlé India’s expansion plans may help the company grow the exports business, said the report. CLICK HERE TO READ FULL REPORT