After Nestle India said last week that its instant noodles had cleared sample tests at the court-designated labs, stock prices of the Maggi-maker have gone up by over 5% in the past few trading sessions on expectations that the popular noodles will be sold in the markets soon.
State governments in Karnataka and Gujarat have lifted the ban on sale of Maggi noodles, following the announcement by Nestle India that the Bombay High Court mandated labs haven't found harmful levels of lead and presence of monosodium glutamate (MSG).
Further, the company on Tuesday said that it would resume manufacturing noodles "as soon as possible".
Supported by raising hopes on Maggi noodles' return to the shelves, Nestle India shares ended 0.8 higher at Rs 6,533 on Tuesday on the Bombay Stock Exchange (BSE) despite weakness in the broader markets.
So, is this the right time to buy the Nestle India stock?
While most of the analysts have turned positive on the stock, a few caution about jumping into the stock.
Japanese brokerage Nomura sees Maggi noodles returning to the shelves soon and maintains a buy rating on the stock.
"There would be a short-term impact on sales and profitability of the company for a few quarters, but the company should be able to fix the product and bring it back to the market," moneycontrol.com quoted Nomura as saying.
Nomura has a target price of Rs 6,950 for the Nestle India stock.
ICICIdirect.com suggests investors to buy the stock at current levels and it forecasts the stock price to touch Rs 7,240.
In contrast, Religare recommends selling the stock at current prices, citing its "rich valuation". It expects the stock to fall to Rs 5,500.