Nestle India Limited held an Extraordinary General Meeting (EGM) on July 24, 2025, where shareholders overwhelmingly approved two key resolutions aimed at enhancing shareholder value and improving stock liquidity.

Bonus Share Issuance

The first resolution, passed with 97.76% approval, authorizes the issuance of bonus equity shares in a 1:1 ratio. This means shareholders will receive one new equity share for each existing share held, effectively doubling their shareholding without any additional cost.

Increase in Authorized Share Capital

The second resolution, which received 97.78% approval, allows for an increase in the company's authorized share capital from ₹100.00 crore to ₹200.00 crore. This will be achieved by creating an additional 100 crore equity shares of ₹1 each.

Financial Implications

To facilitate the bonus issue, Nestlé India will capitalize up to ₹96.42 crore from its retained earnings. As of March 31, 2025, the company's retained earnings stood at ₹4,008.95 crore, which includes ₹837.43 crore reclassified from General Reserves in 2023.

Impact on Shareholders

The bonus issue is expected to benefit over 45,000 members holding single shares, significantly broadening the company's shareholder base. This move follows a 10:1 stock split implemented in January 2024, which had already tripled the retail shareholder base from approximately 1.8 lakh to over 5.5 lakh.

Meeting Details

The EGM was conducted virtually, with 221 members holding a total of 606,914,845 equity shares participating through video conferencing. Key management personnel, including outgoing Chairman and Managing Director Suresh Narayanan, participated from various locations.

Management's Perspective

Mr. Narayanan stated, "The Board's decision to issue bonus shares aims to further improve share liquidity and broaden our shareholder base while recognizing the steadfast support and loyalty of our investors throughout the company's growth and transformation journey."

Looking Ahead

With these resolutions passed, Nestlé India is poised to implement the bonus issue, subject to necessary regulatory approvals. The company will also proceed with the increase in authorized share capital and the consequent alteration to the Capital Clause of its Memorandum of Association.

This strategic move by Nestlé India underscores its commitment to enhancing shareholder value and improving stock accessibility for a broader investor base.

Nestle India shares experienced a significant price adjustment on Friday, dropping over 50% due to the implementation of its first-ever 1:1 bonus issue. This corporate action, aimed at enhancing stock liquidity and improving affordability for retail investors, marks a milestone in the company's history.

Bonus Issue Impact

The stock, which closed at Rs 2,235.60 on Thursday, opened at Rs 1,124.95 on Friday, reflecting the bonus adjustment that effectively doubles shareholding while halving the stock price. It's crucial to note that this sharp decline is not indicative of a market crash or loss in value, but rather a result of the bonus issue mechanics.

Key Points of the Bonus Issue

• Ratio: 1:1 (one bonus share for every share held)
• Objective: Enhance stock liquidity and improve affordability
• Credit Date: Bonus shares to be credited to demat accounts on August 12
• Trading Commencement: Bonus shares to start trading from August 13

Shareholder Impact

Despite the apparent drop in share price, shareholders maintain the same total portfolio value. The bonus issue essentially increases the number of shares while proportionately reducing the price per share, leaving the overall investment value unchanged.

Recent Financial Performance

Coinciding with this corporate action, Nestle India also reported its recent quarterly results:

The company witnessed a 13.40% decline in consolidated profit after tax (PAT) to Rs 647.00 crore, while revenue from operations showed a 6.00% increase to Rs 5,096.00 crore.

This bonus issue, coupled with the recent financial results, underscores Nestle India's commitment to shareholder value and transparency in its operations. As the market adjusts to this new share structure, investors and analysts will be keenly watching how this move impacts the stock's liquidity and accessibility in the coming weeks.