The share price of Nestle India soared on Wednesday on news that a retest conducted at a lab approved by the country's food regulator showed Maggi noodles were safe for consumption.
The development raised hopes that Nestle India will soon be able to regain its market share, which had eroded after controversy erupted over its popular noodle brand, which contributes about 15 to 20 percent to its overall revenues.
Nestle India stock rose as much as 10% in the opening session on the Bombay Stock Exchange (BSE), before paring some of the gains to trade at ₹ 6800, a 7% gain over Tuesday's close.
Overall, the share has recovered by over 22% from a low of ₹5,539.80 hit on 8 June, when the Maggi crisis was at its peak.
The Goa Food and Drugs Administration (FDA) had said on Tuesday that it found Maggi noodles safe to eat, contradicting the ban imposed on the noodle brand by the Food Safety & Standards Authority of India (FSSAI) on grounds that Maggi noodles were not safe for consumption.
On 5 June, FSSAI had ordered Nestle India to recall all available stocks of Maggi noodles after finding harmful levels of lead and monosodium glutamate (MSG) in tested samples.
Earlier, in June, the Goa FDA had sent five samples of Maggi noodles to Mysuru's Central Food Technological Research Institute (CFTRI) for re-testing, after the FSSAI said that the state regulator's findings were 'questionable'.
The CFTRI, an institute approved by the FSSAI, has now found that the samples sent by the Goa food regulator did not contain lead above the permissible levels. The institute also did not find any trace of MSG.
Last week, the Bombay High Court had asked Nestle India and the FSSAI to retest Maggi samples, raising hopes of some relief for the noodle maker.
Following a ban on its popular Maggi noodles, Nestle India has witnessed its first quarterly loss in 17 years. It posted a loss of Rs 64.4 crore in the June 2015 quarter compared to a profit of Rs 288 crore in the same period last year.
The company's sales fell by over 19% to Rs 1,957 crore in the April-June quarter as against Rs 2,432 crore in the corresponding quarter a year ago. The company also saw a one-time loss of ₹452 crore during the quarter.
Last month, Nestle appointed Suresh Narayanan as its India MD in a major reshuffle, replacing Etienne Benet.