Nestle India hits new high; up 2% on 1:10 stock split, healthy Q3 results

The company also declared a second interim dividend of Rs 140 per share for the year 2023.

Shares of Nestle India hit a new high at Rs 23,619, up 2 per cent on the BSE in Thursday’s intra-day trade after the company announced stock split in the ratio of 1:10 i.e. 1 equity share of face value of Rs 10 fully paid-up equity share to be sub-divided into 10 equity shares of face value of Re 1 each. The company also declared a second interim dividend of Rs 140 per equity share for the year 2023.

Nestle India said the record date for sub-division/ split of existing equity shares will be intimated in due course. While, the company has fixed November 1, 2023 as the record date for determining entitlement of the members to the second interim dividend for the year 2023.

On the rationale behind stock split, Nestle India said to enhance the liquidity of company's equity shares and to encourage participation of retail investors by making equity shares of the company more affordable.

Thus far in the calendar year 2023, the stock price of Nestle India has rallied 20 per cent, as compared to 7.5 per cent rise in the S&P BSE Sensex.

Meanwhile, the net profit of Nestle India for the third quarter of the current calendar year (Q3CY23) saw a rise of 37.3 per cent to Rs 908.08 crore, compared to Rs 661.46 crore for the corresponding quarter of the previous year, the company said in a BSE filing. Sequentially, the net profit was up 30 per cent. In Q2CY23, the net profit of the company was Rs 698.34 crore.

The revenue from operations for Q3CY23 came in at Rs 5,036.8 crore, up 9.5 per cent compared to Rs 4,601.8 crore in a year ago quarter. On a quarter-on-quarter basis, the revenue for operations was up 8.1 per cent. It stood at Rs 4,658.5 crore in Q2CY23.

On commodity outlook, Nestle India said uneven rain and deficit is expected to impact production of maize, sugar, oilseeds and spices that may have an adverse impact on pricing. Coffee continues to be volatile because of global supply deficit. The weather during the harvest of Indian Robusta crop may impact production. Upcoming winter weather may impact wheat production. Healthy milk flush is expected in winter which is expected to keep prices stable, the company said.

Amnish Aggarwal – Head of Research, Prabhudas Lilladher said Nestle India reported a strong set of numbers in the current context (low-single digit growth numbers expectations from the sector). The brokerage firm estimates low single digit volume growth. It expect firm commodity prices in coming quarters which will check any meaningful margin expansion from high levels of Q3CY23. Nestle India remains a preferred pick given strong volume growth visibility as it is under indexed in small towns and rural India, the brokerage firm said in result update.