Maggi noodles Nestle row
Food regulator allots Rs.500 crore for lab upgradation, seeks private partners. In Picture: A vendor with a packet of Maggi noodles at a grocery shop in Kolkata, India, June 3, 2015. [Representational Image]Reuters

With its key revenue driver Maggi instant noodles in trouble, the Nestle India stock has been downgraded yet again, this time by ICICI and Kotak. 

The brand holds 72 percent (by volume) of the instant noodle market in India and contributes about 30 percent to its net sales. A nationwide recall of the product is therefore is seen as a major setback to its revenues by analysts. has cut the price target to ₹6,039 from ₹6,901, while Kotak had downgraded it to ₹5,800 from ₹6,012.

"We have a cautious view on the stock as we expect volume growth to remain under pressure in CY15E (volume growth at 0.7% CAGR in CY11-14). We cut our target price on the stock to Rs 6039 per share (45x its CY16E earnings) and maintain our HOLD rating on the stock," according to

Kotak has said that the impact on Nestle India is contigent on certain factors. 

"The impact of the Maggi recall on Nestle India's current year's numbers is likely to be moderate-to-substantial, depending on the pace of (1) resolution of issue at hand, and (2) regaining consumer confidence," analysts at Kotak said in their research note, according to The Economic Times.

The Nestle India stock came under heavy selling pressure this week, as the controversy raged on its Maggi instant noodles, after food regulators of several Indian states detected more than permissible limits of lead and MSG in Maggi noodle samples and banned it.

Falling by 15 percent in six trading sessions, the stock price saw some stabilization on Friday.

The share price of Nestle India closed at ₹ 5,997.10 on the Bombay Stock Exchange on 5 June, down 15 percent from ₹7,064.85 on 27 May. The volume of Nestle's shares traded on the stock exchanges rose three times than the average volume in the past few months.

Foreign brokerage Barclays had earlier downgraded its target price for the Nestle India stock to ₹5,149 from ₹5,593 previously estimated, Business Today reported.

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