Nestle India approves 1st ever stock split aiming to boost market accessibility

Nestle India is set to embark on a historic move by approving its first-ever stock split.

Nestle India, a prominent player in the country’s fast-moving consumer goods (FMCG) sector, is set to embark on a historic move by approving its first-ever stock split. The company’s board, in a decision made on October 19, has given the nod for a stock split in the ratio of 1:10, a significant development in Nestle’s financial strategy in India.

A stock split is a corporate action that increases the number of outstanding shares while reducing the value of each individual share. In this case, the existing shares, each with a face value of ₹10, will be subdivided into 10 shares, each with a face value of ₹1. This alteration will be implemented through a change in the Capital Clause of the Memorandum of Association of the company, pending approval by the shareholders, which will be sought through a Postal Ballot. ffWhile the record date for the sub-division or split of existing equity shares is yet to be disclosed, the company has expressed its commitment to communicate this crucial detail in due course.

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This move by Nestle India aligns with a broader trend in the financial landscape where companies undertake stock splits to enhance liquidity, make shares more accessible to a wider investor base, and potentially boost market participation. A lower share price may attract more retail investors who may find the shares more accessible at the reduced price point.

As of now, Nestle India holds a unique position in the Indian stock market, with its shares being the seventh-highest priced among Indian stocks. With a single share priced at ₹23,325, the stock’s high valuation might have limited accessibility for certain investors.

The positive financial results coupled with the decision to split the stock indicate Nestle India’s commitment to shareholder value and its proactive approach to adapting to market dynamics. The stock split is anticipated to have a positive impact not only on Nestle India but also on the broader Indian stock market. As more investors gain access to Nestle shares at a lower price point, it could lead to increased interest and participation in the stock. The stock price was rs.23,500.60(1.02%up) at 11:50 am