Sell Nestle India - Kotak

Price-led profit management has its limitations

Nestlé's 4QCY11 was marginally below estimates in numeric terms, importantly, it was much below in quality. Volume growth continues to be in low single digits-impact of unbridled price increases is a key reason (apart from capacity constraints), in our view.

While we believe in the market potential for Nestlé's categories, we do not share the Street's optimism that Nestlé's capacity expansion by itself will lead to volume growth (economic environment and execution capabilities also matter, in our view).

We highlight that ITC has already garnered a 10% market share in noodles. SELL.

Source : Equity Bulls

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