Nestle has already pulled Maggi noodles off the shelves across the country after it came under scrutiny for high content of lead and mono-sodium glutamate or MSG (a taste enhancer).
The controversy around Maggi has led to sharp selloff in Nestle, which is on track for a fourth straight day of fall. According to estimates, Maggi contributed over 20 per cent to Nestle's revenues and nearly 30 per cent to the company's bottom line in 2014.
Nestle shares have shed 11.5 per cent in the previous three trading sessions. The company's
market cap has fallen by more than Rs 10,000 crore since the controversy erupted in May.
CLSA, a global brokerage, became the latest firm to downgrade Nestle to "sell". Its target price of Rs 4,900 is 18 per cent lower than Nestle's closing price of Rs 5,997 on Friday. The brokerage cut Nestle's 2015-17 earnings per share estimates by 20-25 per cent.
CLSA said "temporary" damage to the Maggi brand is done and any recovery will be gradual.
Nestle Can bounce back in 5-6 months
Nestle on Friday fielded its global chief executive to help quell one India's most high profile food scares in a decade. Brand specialist Harish Bijoor told NDTV that the development was "positive" and showed that Nestle was serious about India.
"The first step of the comeback has started, it has started with 100 per cent purge in the market," Mr Bijoor said. In the next 5-6 months, Maggi will make a re-entry into the markets and over the next 18 months, Maggi is likely to regain the kind of numbers it had been doing before the controversy, he added.
"The next step is to look at the regulator side of the issue. There should be no ego. If there is a mistake, Nestle needs to stand up and say there's a mistake in this batch and we are worry," he said.
As of 11.38 a.m., Nestle traded 5.2 per cent lower at Rs 5,685.90. The stock underperformed the broader Nifty, which traded 0.5 per cent lower.
