Nestle India Receives 'Sell' Rating from MarketsMOJO, Indicating Bearish Trend for Stock

Nestle India, a leading FMCG company in India, has recently received a 'Sell' rating from MarketsMOJO on October 30, 2024. This downgrade is based on several factors that indicate a bearish trend for the company's stock.
One of the main reasons for the 'Sell' rating is the flat results in September 2024, with the company's ROCE (Return on Capital Employed) at its lowest at 100.39%. Additionally, the company's cash and cash equivalents are also at their lowest at Rs 140.54 crore, and the debtors turnover ratio is at a low of 57.85 times.

Technically, the stock is in a bearish range, with the technical trend deteriorating from mildly bearish on October 30, 2024. Multiple factors such as MACD, Bollinger Band, and KST also indicate a bearish trend for the stock.

Furthermore, the stock is currently trading at a premium compared to its average historical valuations, with a price to book value of 55. This, along with a ROE of 79.6, suggests a very expensive valuation for the company.

In the past year, while the stock has generated a return of -5.85%, its profits have only risen by 9.8%, resulting in a PEG ratio of 7. This indicates below par performance in both the long term and near term.

However, the company does have strong long term fundamental strength, with an average ROE of 91.34% and a low debt to equity ratio of 0. Additionally, the company has high institutional holdings at 21.43%, indicating that these investors have better capabilities and resources to analyze the company's fundamentals.

Nestle India is the second largest company in the FMCG sector, with a market cap of Rs 2,18,589 crore and constituting 11.00% of the entire sector. Its annual sales of Rs 19,785.96 crore make up 5.69% of the industry. Despite these factors, the recent downgrade to 'Sell' by MarketsMOJO suggests caution for investors considering Nestle India's stock.