One of the seventh highest-priced Indian stocks, Nestle India, recently made headlines by announcing its first-ever stock split at a 1:10 ratio. This news comes as the company reported a whopping 37% increase in net profit for the quarter ending on September 30, 2023, as opposed to the trend set by other frontline companies that have reported weaker second-quarter results.
But what does the Nestle India stock split mean for you? Let’s find out.
Splitting the stock into a 1:10 ratio
The Nestle board’s approval for the stock split means that each share worth Rs 10 will be divided into ten equity shares, each having a face value of Re 1. It means that the number of outstanding shares will increase, but the value of each share will be one-tenth of its previous value.
As of the announcement, the share price (Rs. 24,389 today) and after the split could be Rs. 2412.2. However, note that this change will not affect the company’s market capitalization solely due to the stock split.
Changes to Nestle India’s issued post-stock split
| Changes to Nestle India’s issued post-stock split | |||
| No. of shares pre-stock split | No. of shares post-stock split | Face value pre-stock split | Face value post-stock split |
| 9.64 crores | 96.42 crores | Rs 10 | Re. 1 |
Nestle India declares dividends for shareholders
Nestle India has also shared good news for its shareholders by declaring a second interim dividend of Rs 140 per share. This dividend, amounting to Rs 1,349.82 crore, will be paid starting November 16. This second interim dividend follows the company’s announcement of its first interim dividend of Rs 27 per share earlier in the year.
Solid financial performance is one of the top reasons for the Nestle India stock split.
| Nestle India – Total Average revenue in the past 7 years | |
| No. of years | Avg Revenue in (Rs) |
| 1 | 16,997.96 Cr |
| 3 | 15,107.79 Cr |
| 5 | 13,898.07 Cr |
| 7 | 12,721.43 Cr |
For the September 30, 2023 quarter, Nestle India reported a notable 37.28% increase in net profit, reaching Rs 908.08 crore compared to Rs 661.46 crore during the same period the previous year. Sales during this quarter surpassed the Rs 5,000 crore mark, reaching Rs 5,009.52 crore, marking a 9.43% rise from the same period in the previous year.
Nestle India’s Chairman and Managing Director, Suresh Narayanan, attributed the company’s growth to critical investments in brand equity and strong market penetration in small towns and villages. Key brands such as KitKat, Nescafe Classic, Nescafe Sunrise, Munch, and Milkmaid continued to ace the performance trend.
The company’s focus on rural penetration, innovation, premiumization, and entry into new categories like Purina Pet Care and Gerber’s for toddlers has contributed to its resilient performance.
Nestle India’s Stock Performance
What do analysts have to say about the Nestle India stock?
Analysts at Axis Securities talk positively about Nestle India’s consistent performance, citing various factors contributing to the company’s success. These include efforts toward rural penetration, market share gains, innovation, premiumization, and entry into new product categories.
Frequently asked questions
What does a stock split mean?
A stock split is when a company increases the number of its outstanding shares by offering more shares to shareholders. For example, if a company announces a 2-for-1 stock split, each shareholder will receive two new shares for every share they own.
Why is Nestle India splitting its stock?
Nestle India is splitting its stock to make it more affordable to a broader range of investors. The company’s stock price has risen significantly in recent years, making it less accessible to smaller investors.
What is the stock split ratio?
The Nestle India stock split ratio is 10:1. Each shareholder will receive ten new shares for every share they currently own.
When will the stock split take effect?
The Nestle India stock split is expected to take effect on November 16, 2023.
How will the stock split affect my investments?
On the day of the stock split, the number of shares you own will increase tenfold, and the price of each share will decrease by one-tenth. For example, if you currently own 100 shares of Nestle India stock at Rs. 2,438.90 per share, after the stock split, you will own 1,000 shares at Rs. 243.89 per share.
I’m Archana R. Chettiar, an experienced content creator with
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