Nestle India Stock Price: Company History and Analysis (2023)

Nestle India's share price has fallen 283 times in the last 30 years. In other words, just 10,000 invested in the company in 1990 would be worth 28 INR today!

Between 1990 and 2020, all you had to do was…absolutely nothing.

It sounds easy? It's never as easy as it sounds because investing success or failure is all that happens between your two ears.

Very few people can sustain a business for a long time. Even fewer can maintain the same supply after it has doubled.

In this article, I will walk you through the journey of the Nestle India stock price. There are ups and downs. The Maggi ban, how the company went from extreme malaise to regaining market leading position.

We will also discuss Nestlé's brands, its leading position in the market and what we can expect in the coming years.

You will enjoy reading the article and hopefully you will learn. Read to the end.

Analysis of Nestlé in India

Nestlé's leadership in the market:

As you can see from the table above, Nestlé India is the market leader in many segments.

Some key points:

• The ITC is trying hard, but the love for Magga among the Indians is everlasting.
• People are not looking for porridge, they are looking for Cerelac. This category has great growth potential in a country like India.
• The consumption of ready-to-eat products has increased, Nestlé has brands such as Maggi and Pazzta.
• KitKat, Munch, MilkyBar and Bar One are famous names that kids love.
• Globally, Nestlé has more than 30 brands, of which only 9 have been launched in India.

When a company has so many positive aspects, can there be negative aspects? It's always there. When a company is extremely strong, the share price is always expensive.

Nestlé India requires aPhysical educationRatio (P/E) 78. In the last 10 years, the PE has never dropped below 40.

Even during the global stock market crash of 2020, Nestle's share price fell only 10-12% and quickly recovered.

Nestlé is a fundamental holding company. It is not a tradable stock. It is not a stock from which quick or large returns can be expected in the short term.

Let's look at the movement of Nestlé's share price over the last 30 years.

Nestle stock price in India

Nestlé has certainly provided its shareholders with "good food and good life" for the past few decades. The company was solid.

The big stock price crash during the 'Maggi ban' between 2015 and 2016 was a great opportunity. It was a crisis that the company handled very well. Those who had faith were rewarded as the stock price has tripled in the last 4 years.

The company went from being the market leader in the instant noodle segment to zero sales. Many companies will never recover. But Nestle quickly reclaimed the top spot.

When a product like 'Maggi' is banned, it creates a huge vacuum. Contestants often take advantage of those opportunities. But very few of them were able to profit. ITC with Yippee tried but failed to make a significant difference.

The moment Maggi was allowed to be sold, people who missed out on the product lined up to buy it in bulk. Proving once again that Maggi is irreplaceable in India.

Think of it like a popular local restaurant in your area, where people love the taste of the food. When it temporarily closes, people miss the taste and when it reopens, people line up to order.

This is Maggi throughout the country.

And it is precisely the effect of such strong brands that is reflected in the share price.

In the last 30 years, only 6 of those years have been negative for Nestlé India.

If you want to buy a company like Nestlé and keep it for a long time, it always makes sense to wait for corrections.

Corrections mean not only a drop in the stock price, but also when the stock gives up.time correction. If you find that Nestle's earnings are improving, but the share price hasn't changed for 1-2 years or more, it could be an incredibly good opportunity for slow buildup.

Nestlé belongsconsumer goodsDepartment. These companies resist very well in times of crisis because people do not stop consuming food. In fact, Maggi's sales increased during the Covid lockdown last year.

However, in good times the so-called "smart money" shifts from less risky companies like Nestlé to riskier ones. Your profits would be booming, while Nestlé would be at the same level.

This happens when earnings keep rising, the share price stagnates, and P.E (price over earnings) falls, making companies like Nestle more attractive. Wait for those opportunities, instead of buying Nestlé at any price.

Please note that this article is for educational purposes only. We do not make buy or sell recommendations. Consult your financial advisor.

Return of Nestlé shares in India

How much has Nestlé India earned in the last 2 years? How about 3, 5, 10, 20 years?

See the following table:

The one thing that really stands out from the table above is that no matter when you invested in Nestle India shares, it was an extremely good mix.

Many people want to double or triple their money in a short period of time in the stock market. They forget that doubling your money means they will give you 100% of your money back. A term bank deposit today yields less than 6% before taxes.

Nestlé consistently offers around 20% profitability. The last 5 years have been significantly better, but in a 20-30 year period the company has made a 20% return.

Those who are looking for quick profits, always keep in mind that even if your 15-20% money can make you rich for a long time.

At 20%, Nestlé turned one rupee into 280 rupees over a period of 30 years.

A person who focuses on making a lot of money, saves a decent amount of money, and invests it in quality compounds like Nestle, can also become extremely wealthy.

Compared to some of the top players like HDFC Bank, Pidilite etc. Nestlé is really not performing at this level. However, he turned 1 rupee into 91 rupees in 25 years. And each rupee is invested at 33 rupees over a period of 20 years.

Following…

1 lakh invested in Nestle India

If you invested 1 lakh in 'Nestle India', how much return did you get in different time periods?

The following table has the following forms:

If you had invested 1 lakh in Nestle 10 years ago, it would be 4.85 lakh today.

This does not include dividends. For the past 10 years, Nestlé has been rewarding its shareholders with dividends of more than Rs 1,100 per share.

Over a period of 30 years, Nestlé shareholders converted 1 lakh into Rs 2.83 crore.

Nestlé shares vs. FD returns

What would happen if you opened a 1 lakh time deposit in a bank and once again invested 1 lakh in Nestle India shares? Let's assume that both investments were made in 2010 (that is, 10 years ago).

The results are below.

Note: FD rates are revised every year based on data provided by the Reserve Bank of India. The average rate of DF in the last 10 years was around 7.4%. It is lower at the time of this writing, but was higher in 2010.

The FD return graph looks great. But 10 years is a long time. Let's relive how the investor would feel.

• Many people in India prefer fixed deposits because they are very safe. Money back guaranteed unless you're stupid enough to save it at your local co-op bank.
• Investing in Nestlé involves the risk of uncertainty. What happens if the company does not grow? What if the stock had already gone up a lot when I bought it? What if the market crashes?
• These are normal questions that go through the mind of every investor. There is fear in actions, there is no fear in FD.
• This is an important factor because Indians can risk their lives riding their bikes without a helmet, but they don't like to risk money.
• For comparison, suppose an investor has deposited 1 lakh in FD and the same amount in Nestle.
• In the first 5 years, the returns were about the same.
• Six years later, the term deposit surpassed Nestlé. This is very important.
• Risk assets like Nestle had lower returns than a fixed deposit over the period of 2010 to 2016. We are talking about one of the leading companies in India.
• How many investors will lose patience here? Maggie's fear of not recovering in 2016 and the evil returns in 6 years. Many would sell here. Actually, this was the time to buy more.
• For the next four years, the battle was one-sided. As interest rates fell, Nestlé began to gain traction.
• Within 10 years, investments in Nestlé increased almost fivefold. While FD investments have doubled.
• The above calculation does not include dividends. Nestle paid more than $1,100 per share in dividends between 2010 and 2020.
• An investor who invested 1 lakh in Nestle in 2010 would have around 26 shares in the company. That's about 29,000 more than the dividend yield.
• And as Steve Jobs would say, there is "one more thing." When your FD expires, you must pay income tax on the returns. If you own Nestlé shares, you pay nothing until you sell them. Even if you sell, your long-term capital gain will be 10%.
• The battle between investing in a quality, well-researched company and a time deposit is one-sided.
• Uncertainty and risk are one. In the second is security. It all comes down to this. Your choice? Tell us in the comment section below.