Moneycontrol BureauNestle India is on the path to recovery but a gradual one which is more than factored in at a valuation of 51 times one-year forward earning, says broking firm.CLSA has retained its 'sell' rating on the stock with a 12-month price target of Rs 6000."While driving volume growth is a priority, margins remain an important focus," says the CLSA note, adding that the company plans to focus mainly on urban markets."Restricting target market along with a high margin hurdle remains a concern in the context of rising competition (ITC, Patanjali, etc), across categories, in our view," says the CLSA note.On the positive side, CLSA says the organisation is simplified with an aim to speed up the delivery with unwanted processes curtailed. Also, clarity on regulations has been helping in portfolio expansion, and consumer engagement has improved to the point of being the best in the industry now, feels CLSA."While Nestle clearly is on the path to recovery, underlying growth (excluding noodles, surplus fat and portfolio optimisation initiatives) remains flat for 1HCY16," says the CLSA note, adding that the impact of Nestle's renewed aggression would be gradual.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
