The total stake of foreign portfolio investors (FPIs) in Nestle India observed a high time growth in the December quarter along with a trust that the company would come back strongly after lifting of the ban on its flagship product Maggi
Authentic data showed FPIs raised stake in the FMCG Company by 269 basis points to 14.86 % by the end of December quarter as compared to 12.17 % in the September quarter.
On Wednesday the closing was Rs 5,471.15 and the stake was worth approximately Rs 7,700 crore.
According to database AceEquity, this was the highest stake FIIs have ever attained in the company from the time exchanges started disseminated data since 2001. The institutional category had increased their stake in the stock to 14.52 % in the June quarter of 2014, but cut it in the company regularly to 12.17 % at the end of the June quarter of 2015.
Brokerage SBICAP said in its results preview that Nestle's performance will see a sequential improvement after the re-launch of Maggi in November, but it is likely to remain weak as the full impact of the re-launch will be experienced only in Q1 of C16.
Maggi noodles, contributed around one-third of Nestle India's sales, before it went in loses in June last year, after the Food Safety and Standards Authority of India (FSSAI) banned it because of higher-than-permissible lead levels. Net sales fell 32 % YoY, while net profit declined 60 % for the September quarter.
In November, tests done on fresh samples cleared Maggi from the charges.
Brokerage Motilal Oswal Securities is neutral on the stock. The brokerage expects Nestle India to clock a 15 % YoY decline in net sales to Rs 2,130 crore.
The brokerage said in a report that they estimated Ebitda margins to contract 370bp YoY to 18.3 % due to higher ad spends and expenses related to re-launch of Maggi. We expect Ebitda to decline 30 % YoY to Rs 390 crore and PAT to decline 38 % YoY to Rs 210 crore.