Not a good time to buy Nestle: Hemindra Hazari

In an interview with ET Now, Hemindra Hazari, Market Expert, shares his views on Nestle. Excerpts:

ET Now: Is it a good time to buy into a great company like Nestle when they are going through a temporary slowdown?

Hemindra Hazari: See normally I would say yes but in Nestle’s case analyst are still overestimating the earnings because Maggi in Nestle constitutes about 16% to 20% of its turnover in India. Many brokerages are still forecasting a much higher sales growth in calendar 2015 than what they were factoring in 2014. In the first quarter, Nestle only reported 8.5% growth in sales. My contention is that Maggi is bound to impact the sales of Nestle and as a result, the earnings.

Analysts are forecasting that Nestle may clock earnings between 15% to 30% for the calendar year 2015 and the stock is trading at close to 40x, so there is going to be a greater knock on the earnings than what analysts are currently forecasting.

ET Now: So 40x is not a good time to buy Nestle.

Hemindra Hazari: No, it is not a good time at all to buy Nestle.