Nestle shares fall almost 3% after BofA downgrades stock to Underperform and cuts target price

Nestle India shares dropped 2.64% to Rs 2,175.10 in Tuesday’s session after BofA Securities downgraded the FMCG major to ‘Underperform’ from ‘Neutral’. The brokerage also cut its 12-month target price to Rs 2,140 from Rs 2,315, citing subdued business outlook and rich stock valuation.

BofA flagged rising cost pressures, a slowdown in demand trends, and intensified competition—particularly from regional and cooperative players—as key concerns impacting Nestle’s near-term performance. It expects modest growth despite some volume recovery and sees pricing challenges in commodities like coffee and cocoa, which form nearly 30% of Nestle’s product portfolio.

Additionally, the brokerage highlighted the upcoming leadership change, with Manish Tiwary set to take over as MD in August. It noted that a strategy refresh under new leadership is awaited and critical for a potential turnaround.

BofA also expects Nestle to initiate a portfolio rejig over the next 3–5 years, focusing on new growth areas like health-conscious products, although near-term growth will depend on core product performance. The stock’s sharp fall came as investors reacted to the lower earnings visibility and valuation downgrade.

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