On December 18, a Nifty 50 Index Company, Nestle India in a circular to exchange informed that the company purpose of sub-division/ split of existing Equity Shares of the Company. Nestle India shares made gap up opening following the news and closed after surging 5% to reach a 52-week high of Rs 25,705 on December 19. The company announced January 5 as the record date for its stock split. The company's board approved its first-ever stock split in a ratio of 1:10, meaning every shareholder will get 10 shares of Nestle for each share they currently hold. This stock split increases the number of shares issued and outstanding, thereby increasing the liquidity of the scrip.
Nestle India Ltd. is a leading player in the FMCG segment, primarily involved in the food business, which includes milk products and nutrition, prepared dishes and cooking aids, powdered and liquid beverages, and confectionery. The company manufactures products under brand names such as Nescafe, Maggi, Milkybar, Milo, Kit Kat, Bar-One, Milkmaid, and Nestea. Nestle has a presence across India with eight manufacturing facilities and four branch offices spread across the region.
The stock split is a corporate action in which a company issues additional shares to shareholders, increasing the total shares by the specified ratio based on the shares they held previously. Companies often choose to split their stock to lower its trading price to a more comfortable range for most investors and to increase the liquidity of trading in its shares.
Nestle India reported 37.3% growth in net consolidated profit at Rs. 908 crore in Q3 CY23, as compared to Rs. 661.4 crore in the year-ago period. The consolidated revenue rose 9.5% to Rs. 5,036 crore, and EBITDA income stood at Rs. 1,225 crore, up 21.3% against Rs.1,009.6 crore in the previous quarter. Domestic revenue surged 10.6% YoY, while exports declined by 9.6% YoY.
Nestle stock following the news of a stock split announcement broke out of a rising wedge pattern (forming from high of April 2020) on the upside and is now trading in a parallel channel. RSI on weekly and monthly is trading at over bought zone at 73.43 and 73.51. Stock is trading at upper band of Bollinger band.
The company's shareholding pattern on the BSE shows that promoter entities own 62.8% of 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.
Year to date, Nifty FMCG index has delivered return of approximately 25%, whereas Nestle India has delivered Year to date return of 29% as of Dec 19. Stock at time of reporting was trading at Rs. 25,370.20.