Shares of Nestlé India Ltd gained more than 2% after the company issued a clarification regarding reports that the Food Safety and Standards Authority of India (FSSAI) had raised concerns over a possible insect infestation in MAGGI noodles.
The stock rose 2.3% to an intraday high of Rs 1,408.65, compared with the previous close of Rs 1,375.85. The company has a market capitalisation of Rs 2.67 lakh crore.
Company rejects allegations
In a communication to the NSE and BSE, Nestlé India said media reports were based on an unverified social media complaint.
According to the company:
- No valid complaint sample was received.
- The complainant was reportedly unreachable.
- The allegations lacked verification.
Nestlé India said it had already provided a detailed response to regulators.
Samples tested by independent laboratory
The company submitted:
- Batch-wise quality records.
- Market samples.
- Test reports.
It also sent reference samples from the same batch to an FSSAI-notified and NABL-accredited laboratory.
According to Nestlé India, the independent tests:
- Found no infestation.
- Confirmed that the samples complied with prescribed quality standards.
The company said all material information had already been disclosed under SEBI listing regulations and expressed confidence in the ongoing regulatory review.
Nomura maintains Buy rating
Nomura retained its Buy recommendation on Nestlé India and assigned a target price of Rs 1,500.
Based on the previous closing price, the target implies an upside of around 9%.
The brokerage noted:
- The complaint originated from an unverified social media account.
- Independent testing reportedly found no infestation.
- The company has submitted quality-related documents to FSSAI.
UBS remains Neutral
UBS maintained a Neutral rating on parent company Nestlé SA, with a target price of CHF 80.
The brokerage said:
- Nestlé India contributes around 2.2% of global sales.
- The 2015 Maggi controversy had affected group growth and margins.
UBS said it is monitoring developments following the recent FSSAI notice.
Financial performance
For the latest period:
- Revenue increased to Rs 6,748 crore from Rs 5,504 crore, up 22.6%.
- Net profit rose to Rs 1,114 crore from Rs 885 crore.
Key financial ratios
- ROE: 73.2%
- Three-year average ROE: 92.3%
- ROCE: 84.1%
- Debt-to-equity ratio: 0.08
- Dividend payout ratio: 74.3%
About the company
Established in 1961, Nestlé India Ltd is a subsidiary of Nestlé SA.
Its portfolio includes brands such as:
- MAGGI.
- Nescafé.
- KitKat.
- Milo.
The company operates manufacturing facilities and a distribution network across India and focuses on nutrition, sustainability and responsible sourcing.
TL;DR:
Nestlé India clarified that allegations of insect infestation in MAGGI noodles were based on an unverified social media claim. The company said independent laboratory tests found no infestation and confirmed compliance with quality standards.
AI summary
- Nestlé India denied reports of insect infestation in MAGGI.
- The company said independent tests found no contamination.
- Nomura retained a Buy rating with a Rs 1,500 target.
- UBS maintained a Neutral rating on parent company Nestlé SA.
- Revenue and profit rose 22.6% and 25.9%, respectively.
