Nestle India to consider its first-ever stock split; share among top Nifty gainers

According to analysts, Nestle India’s September quarter numbers is well-placed to outperform the FMCG pack, led by stable volume growth and strong pricing growth

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Nestle India has informed exchanges that its board of directors will consider split of its existing equity shares on October 19, along with the announcement of its September quarter results. If the proposal is approved, it will be Nestle India‘s first-ever stock split. The FMCG major has not announced any stock split or bonus issue in its history.

“Alteration in the share capital of the Company by sub-division/ split of existing equity shares having face value of Rs. 10/- each, fully paid up, as may be determined by the Board of Directors,” the exchange filing stated.

On back of board proposal, the stock gained over 2 percent intraday and was among the top Nifty gainers. At 11:40 am, the stock was quoting at Rs 22,610, up 1.32 percent from previous close.

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On October 19, the company will also declare second interim dividend for the year 2023, if any. “Second interim dividend for the year 2023, in case declared, shall be paid on and from 16th November 2023,” the filing added.

According to analysts, Nestle India’s September quarter numbers is well-placed to outperform the FMCG pack, led by stable volume growth and strong pricing growth.

“Our FMCG pricing monitor (e-commerce) reveals that Nestle continued to take price increases on several products (especially baby food and coffee) during the quarter. We model 11 percent/15 percent YoY growth in domestic/export revenues,” Kotak Institutional Equities said.

According to the foreign broking firm UBS, Nestle India’s valuation is currently high, which may limit potential stock price growth. The stock is currently trading at 66x 1-year forward earnings, which is 1 standard deviation above the mean multiple.

Despite this, UBS is optimistic about the company’s long-term revenue and volume growth. The brokerage highlights Nestle India’s strong brand equity, pricing and premiumisation levers, and focus on product innovation as the growth drivers in rural markets.

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