Sunday, April 28

Nestle India set first stock split date; Big Opportunity for Investors

Mumbai, 21st December, 2023: Nestle India, the owner of popular brands like Nescafe, Maggi, and Kit Kat, is set to proposed stock split. The board of directors of this leading FMCG company has announced that January 5, 2024, will serve as the record date for the previously announced stock split. On October 19, Nestle’s board granted approval for a stock split in the ratio of 1:10. This means that each equity share with a face value of ₹10 will be divided into 10 shares, each with a face value of ₹1.

The stock split will result in an increased number of outstanding shares, thereby enhancing the liquidity of the share. Taking into account the most recent shareholding pattern available on the BSE, promoter entities presently hold a 62.8% stake in the company. Foreign institutional investors (FIIs) and domestic institutional investors (DIIs) hold stakes of 12.1% and 9.32% respectively. As of September 30, 2023, individual retail investors possess a 3.63% stake in the company.

In response to this news, Nestle India’s shares surged 1.1% during the opening trade, reaching ₹25000 level on the BSE. The stock, which is currently trading at ₹25000 opened higher compared to the previous closing price of ₹24,356.20.

With a market capitalization of ₹2.37 lakh crore, Nestle demonstrated a strong overall performance during the September quarter of FY24, driven by Nestle India.

According to the latest shareholding pattern available on the Bombay Stock Exchange (BSE), promoter entities hold a stake of 62.8% in the company. Foreign institutional investors (FIIs) and domestic institutional investors (DIIs) own 12.1% and 9.32% respectively. Individual retail investors currently hold a 3.63% stake in the company as of September 30, 2023.

Nestle showcased a robust performance in the September quarter of FY24, attributed to strong growth across all categories. This growth can be attributed to a favorable product mix, pricing strategies, and volume expansion. During this period, the Nestle board also declared a second interim dividend of ₹140 per equity share for 2023, totaling ₹1,349.82 crore. The company had already declared a first interim dividend of ₹27 per equity share on May 8, 2023. Over the past 12 months, Nestle India distributed a dividend of ₹242 per share, resulting in a current dividend yield of 0.98% based on the current share price.

Following the calendar year as its fiscal year, Nestle India reported a 37.3% increase in net consolidated profit for Q3 CY23, amounting to ₹908 crore, compared to ₹661.4 crore in the same period the previous year. The consolidated revenue also rose by 9.5% to ₹5,036 crore as compared to ₹4,601 crore in the previous year. EBITDA income came in at ₹1,225 crore, reflecting a 21.3% growth from ₹1,009.6 crore in the previous quarter, with margins expanding to 24.5% due to better-than-expected gross margin expansion and operating leverage. While domestic revenue witnessed a YoY surge of 10.6%, exports experienced a decline of 9.6%.

Post the September quarter results, Axis Securities maintained a ‘buy’ rating and increased the target price to ₹26,900 per share from the earlier estimate of ₹24,600 apiece. The brokerage firm stated that Nestle possesses all the essential factors for long-term growth.

“We hold a positive outlook on Nestle as it consistently delivers resilient performance, driven by efforts to penetrate rural areas, gain market share through the RURBAN strategy, and maintain a strong focus on innovation with the introduction of 125 products in the last seven years,” the brokerage firm emphasized in its October report.