Nestle India Announces 1:1 Bonus Share for Shareholders Following Board Approval
Nestle India has announced an exciting development for its shareholders, approving a 1:1 bonus equity share issue. This decision, made by the company’s board, marks the first bonus share issuance since 1996. The bonus shares, each with a face value of Re 1, will be distributed to shareholders holding equity shares of the same value. The record date for this issuance will be announced in the near future, following the company’s earlier indication of considering a bonus share issue.
Details of the Bonus Share Issue
The board’s decision to issue bonus shares comes as a gesture of appreciation for the support from shareholders throughout the company’s growth journey. Outgoing Chairman and Managing Director Suresh Narayanan highlighted this during the Annual General Meeting (AGM), stating that the issuance is subject to approval at an Extraordinary General Meeting (EGM) scheduled for July 24, 2025. This move is expected to benefit over 160,000 small shareholders, many of whom hold fewer than five shares, a demographic that has long anticipated such an initiative.
The announcement follows a period of fluctuating stock performance for Nestle India. Over the past year, the company’s shares have seen a decline of 4.13%. However, there has been a notable recovery, with the stock gaining 11.98% year-to-date and 12.97% over the last six months. Despite a slight dip of 0.97% in the past month, the recent announcement has positively impacted the stock, which rose nearly 1% in morning trade following the news.
Financial Performance Overview
Nestle India recently reported a 6.5% decline in consolidated net profit for the March quarter of FY25, amounting to Rs 873.46 crore. This decline is attributed to challenges in the fast-moving consumer goods (FMCG) sector, including food inflation and reduced urban consumption. In comparison, the company had posted a profit of Rs 934.17 crore during the same period the previous year. Despite the profit decline, revenue from product sales increased to Rs 5,447.64 crore, up from Rs 5,254.43 crore in the previous year.
The financial landscape for Nestle India reflects broader trends in the FMCG sector, where companies are grappling with rising costs and changing consumer behavior. The bonus share issuance is seen as a strategic move to bolster shareholder confidence amid these challenges.
Market Reaction and Future Outlook
Following the announcement of the bonus share issue, Nestle India’s stock experienced a positive reaction, trading at Rs 2,426.95 on the Bombay Stock Exchange (BSE), reflecting a 0.94% increase. This uptick indicates a favorable response from investors, who view the bonus shares as a sign of the company’s commitment to its shareholders.
Looking ahead, the company is poised to navigate the complexities of the FMCG market while continuing to engage with its shareholder base. The upcoming EGM will be a crucial event, as it will determine the final approval of the bonus share issuance. Nestle India’s proactive approach in rewarding its shareholders could enhance its reputation and strengthen investor relations in the long term.
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