Nestle India Board To Consider Stock Spilt, Interim Dividend on 19-Oct-2023

Nestle India shares surged over 4% in early trading today following an announcement from the company about considering a stock split and an interim dividend in its upcoming board meeting. Nestle's stock price rose as much as 4.45% to ₹23,333.65 per share on the BSE.

Stock Split Proposal

Nestle India, the maker of Maggi noodles, revealed that its board of directors is set to deliberate on the proposal for a sub-division of shares with a face value of ₹10 each on October 19. A stock split is a corporate action that involves issuing additional shares to existing shareholders, increasing the total number of shares based on a specified ratio. This move aims to lower the trading price of the stock and enhance liquidity.
In addition to the stock split, Nestle's board will also discuss and potentially recommend a second interim dividend for the year 2023 during the October 19 meeting. If approved, the record date for this dividend will be November 1, with payouts scheduled to commence on and from November 16, 2023. 

Nestle India has a history of consistently rewarding its shareholders. In 2022, the company declared a dividend of 2200%, which equated to ₹220 per share.

As of June 30, 2023, the promoters held a 62.76% stake in Nestle India. The remaining 37.24% was distributed among public shareholders, with foreign portfolio investors holding 12.38%, domestic institutions holding 9.05%, and individual shareholders holding 12.85% of the company's shares.

Performance and Analyst Views

Nestle India's stock price has shown positive performance in 2023, rallying 18% compared to a 6.3% increase in the S&P BSE Sensex during the same period. Over the past five years, Nestle has delivered a return of 141% to its shareholders. While brokerage UBS downgraded its rating on Nestle India to 'neutral' from 'buy,' they raised the target price of the stock from ₹23,000 to ₹24,500, suggesting a potential upside of up to 7%, and remains optimistic about Nestle India's long-term revenue and volume growth.

Financial Highlights

For the first quarter of the current financial year (Q1FY24), Nestle India reported a net profit of ₹698.34 crore, marking a 36.8% increase from the corresponding quarter in the previous year. However, this represents a 5.1% decrease sequentially from Q4FY23. The revenue from operations for Q1FY24 reached ₹4,658.53 crore, a YoY increase of 15.1%, but a 3.56% decline compared to the previous quarter.

Company Details

Nestle India Limited is a part of Nestle S A, a Swiss multinational corporation that mainly operates in the food industry and holds 62% stake in it. In terms, of revenue It is the world's largest food company.
Nestle's association with India way back in 1912 since then they have earned a strong reputation as pioneers in the culinary world, especially renowned for their diverse range of products under the popular Maggi brand. Nestle India consistently ranks among the top two players in various product categories, including milk products, nutrition, beverages, prepared dishes, cooking aids, and chocolate and confectionery.

Conclusion

The news about Nestle India possibly splitting its stock and offering an interim dividend has made investors quite happy, and as a result, the company's stock price has gone up today. These plans will be discussed during a board meeting on October 19, also the company will reveal its financial results updates for the September quarter, shareholders and people watching the market are waiting for the outcome.