Nestle India shares jumped 2.6 percent on April 25 after the FMCG giant reported better-than-expected earnings for the March quarter, cheering investors spooked by a probe against the FMCG major for alleged high sugar content in its baby food.
Nestle India's standalone net profit was up 27 percent at Rs 934 crore from the year-ago quarter. The Maggi maker's revenue rose nine percent to Rs 5,268 crore in the March quarter.
The Indian arm of the Swiss food giant Nestle said its board recommended a final dividend of Rs 8.5 per share of Re 1 face value.
At 2.17 pm, the stock was trading at Rs 2,560.60 on the National Stock Exchange, up 2.42 percent from the previous close.
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The stock wiped off the impact from reports stating that the FMCG major adds sugar and honey to its infant milk and cereal products in developing countries like India but not in the European markets.
The Food Safety and Standards Authority of India (FSSAI) has reportedly ordered a probe into to alleged violations. All companies selling baby food, including Nestle India, are under the scanner.
The counter was trading higher than the closing price on April 16 before the report was released.
Naveen Kulkarni, Chief Investment Officer, Axis Securities, told CNBC-TV18 that he remained positive on Nestle India, based on its unique product profile.
Nestle India has seen a slew of controversies but has always emerged to come out on top. Nestle would manage the allegations, address the issues and come out stronger, Kulkarni said.
Also Read | Nestle India net profit rises 27% to Rs 934 cr in March qtr, declares Rs 8.50 dividend
"I have a neutral stand at the current juncture on the Cerelac issue since I don't know how long remedial action will take. However, if you focus purely on the earnings, I think the net profit is very impressive, especially when you compare it to what HUL came up with," market expert Prakash Diwan said.
Nestle India shares have gained more than 5 percent over the past six months, underperforming the benchmark Nifty 50 which risen more than 17 percent during the period.
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