Religare Institutional Research has maintained 'Sell' on Nestle India with target price of Rs 4,400 in its report.
Commenting on the investment rationale, the stock broker said, ''Nestle India has underperformed the BSE FMCG index by 20% over the past three months as slowing demand and increased competition raised concerns over growth.
Our channel checks indicate continued pressure on demand, especially in the chocolate and coffee categories, even as competition is eating into noodle segment market share. Valuations too are rich and do not price in the earnings slowdown.
We cut our CY14E/CY15E earnings by 3%/6% while revising our Dec'14 TP to Rs 4,400 (from Rs 4,700). Maintain Sell on rich valuations (36.2x/32.4x CY14E/CY15E earnings) and concerns over slowing urban demand. Key upside risks to our call would be a revival in volume growth led by a pick-up in urban consumption, and an open offer by the parent to increase its stake in Nestle at a substantial premium.''
Disclaimer: IRIS has taken due care and caution in compilation of data for its web site. Information has been obtained by IRIS from sources which it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website.