Nomura maintains 'neutral' on Nestle

Nestle
CMP: Rs 2,213.65
TARGET PRICE: Rs 2,177

Brokerage house Nomura has raised its earnings estimates for Nestle India for CY09 and CY10 by 16% and 11%, but retained its 'neutral' rating, citing fair valuations.

"Over the past couple of quarters, Nestle India has shown great resilience in expanding margins despite rising input prices. However, we believe the best is behind the company, and, more importantly, the stock now appears fairly valued on both absolute and relative basis," said the Nomura note to clients.

"Over the near to medium term, we expect the domestic business to drive growth, and exports should continue to be on a declining mode. Among the various categories, the beverages segment has remained under pressure in both the domestic and exports markets and the situation is unlikely to change in the near term," the note added.