Nestle India, which owns brands such as Nescafe, Maggi, and Kit Kat, will be in focus today after its board approved the record date for its proposed stock split. The board of directors of the FMCG major has set January 5, 2024, as the record date for their earlier announced stock split. On October 19, the Nestle board gave a nod to the stock split proposal for the first time in the ratio of 1:10. This means, each equity share of face value of ₹10 apiece that an investor holds will be subdivided into 10 shares of face value of ₹1 each.
The stock split will increase the number of shares issued and outstanding, which will boost the liquidity of the share.
As per the latest shareholding pattern available on the BSE, promoter entities own 62.8% stake in the company, while foreign institutional investors (FIIs) and domestic institutional investors (DIIs) own 12.1% and 9.32%, respectively. Individual retail investors hold a 3.63% stake in the company as of September 30, 2023.
Reacting to the news, the shares of Nestle India rose 1.1% in opening trade to ₹24,627.95 level on the BSE. The FMCG heavyweight opened higher at ₹24,560 against the previous closing price of ₹24,356.20.
With a market capitalisation of ₹2.37 lakh crore, the stock trades 2.5% lower than its 52-week high of ₹25,240 touched on December 12. 2023. The share price has risen 38% from its 52-week low of ₹17,888 touched on March 15, 2023.
Nestle delivered broad-based performance in the September quarter of FY24, driven by strong growth across all categories, with a healthy balance of the product mix, pricing, and volume growth. The Nestle board also declared a second interim dividend for 2023 of ₹140 per equity share, amounting to ₹1,349.82 crore. The company declared its first interim dividend of ₹27 per equity share on May 8, 2023. In the past 12 months, Nestle India declared a dividend of ₹242 per share, while it paid a total of 68 dividends since May 31, 2001. At the current share price, the dividend yield stands at 0.98%.
Nestle India, which follows the calendar year as fiscal year, reported 37.3% growth in net consolidated profit at ₹908 crore in Q3 CY23, as compared to ₹661.4 crore in the year-ago period. The consolidated revenue rose 9.5% to ₹5,036 crore as compared to ₹4,601 crore in the year-ago period. EBITDA income stood at ₹1,225 crore, up 21.3% against ₹1,009.6 crore in the previous quarter, while margins increased to 24.5% on account of better-than-expected expansion in gross margins and operating leverage. Domestic revenue surged 10.6% YoY while exports declined by 9.6% YoY.
Post September quarter results, Axis Securities maintained ‘buy’ rating and raised target price to ₹26,900 per share from ₹24,600 apiece estimated earlier, saying “Nestle has all the right levers for growth in the long run”.
“We remain positive on Nestle as it consistently delivered resilient performance, led by efforts towards rural penetration and market share gains through the RURBAN strategy and constant focus on innovation through launching 125 products in the last seven years,” the brokerage said in a report released in October.
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