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.

Nestle India , a leading food and beverage company, has made a significant announcement that is set to benefit its shareholders. The company has declared its first-ever bonus share issue and has set August 8 as the record date for this corporate action.

Bonus Issue Details

Nestle India has announced a 1:1 bonus issue, meaning shareholders will receive one free share for every share they hold. This move will effectively double the number of outstanding shares of the company. The last day for investors to purchase shares to qualify for this bonus issue is August 7.

Implications for Shareholders

This bonus issue serves multiple purposes:

1. Rewarding long-term shareholders: The bonus shares are a way for Nestle India to reward its loyal shareholders who have held onto the company's stock.

2. Improving stock accessibility: By increasing the number of outstanding shares, the stock price is expected to adjust proportionately, potentially making it more accessible to a broader range of investors.

3. Increasing liquidity: With more shares in circulation, the liquidity of Nestle India's stock in the market is likely to improve.

Recent Financial Performance

In its latest quarterly results, Nestle India reported mixed financial outcomes:

• Revenue: The company's revenue from operations increased by 6% to Rs 5,096.00 crore.
• Profit: However, the profit after tax saw a decline of 13.4%, settling at Rs 647.00 crore.

While the revenue growth is positive, the decline in profit might be a point of concern for investors.

Conclusion

The announcement of Nestle India's first-ever bonus issue comes at an interesting time, given the company's recent financial performance. While the bonus issue is likely to be welcomed by shareholders, investors will also be keeping a close eye on the company's ability to improve its profitability in the coming quarters. As always, investors are advised to conduct their own research and consider their financial goals before making investment decisions.