Nestle India shares turn ex-date for stock split; FMCG stock reacts

Today marks a significant moment for Nestle India Ltd., as the company’s stock becomes ex-date for its much-anticipated split. Shareholders who find their names on the company’s record as of today’s date are set to receive shares as part of the split. This move follows an announcement made by Nestle India in October, where the company’s board agreed to divide each fully paid-up equity share, originally valued at Rs. 10, into ten new shares, each with a face value of Re. 1, pending approval by shareholders through a postal ballot.

The pivotal date for this process, designated as the “Record Date,” was established as Friday, January 5. This date is critical for identifying the shareholders entitled to participate in the subdivision of the existing equity shares. Consequently, each original share with a Rs 10 face value will be split into ten new shares, each valued at Re. 1, with equal rights in every aspect. This subdivision received the green light from shareholders in a postal ballot conducted on December 8.

As we anticipate Nestle India’s third-quarter results, analysts from Kotak Institutional Equities project a robust performance. They expect the company to achieve significant revenue growth of 9.7% year-over-year in the FMCG sector. This growth is thought to be driven by a 7% increase in volume and a 2.7% rise in pricing, despite the base quarter volumes being impacted by a significant price hike in Maggi LUP.

Kotak’s analysis suggests a 10.1% year-over-year increase in domestic revenues and a 1.5% rise in export revenues. The Gross Margin (GM) is expected to remain relatively stable, with a slight quarter-over-quarter increase, influenced partly by a decrease in the prices of edible oils, wheat, packaging, and dairy. Moreover, they anticipate Nestle India’s Ebitda margin to be around 23.8%, a slight dip from the previous quarter but an improvement over the previous year, with increased advertising and promotional spending balancing out the expansion in gross margin.