1:10 Stock Split: FMCG Trading Over Rs 27,000 Per Share In Focus As They Will Turn Ex-Split On January 5

FMCG giant, Nestle India will be in focus on Friday for its stock split in the ratio of 1:10. The company had fixed January 5th as the record date to turn ex-split. This will also be the first stock split by the popular brand Maggi maker. In a year, Nestle shares have rallied by over 37% on the BSE.

Ahead of a stock split, Nestle's share price stood at Rs 27,116 apiece, surging by Rs 475.65 or 1.79% on BSE with a market cap of Rs 2,61,440.86 crore.

The stock is a couple of hundred away from its 52-week high of Rs 27,707.45. The stock is currently up by 52% from its 52-week low of Rs 17,888 apiece.

The stock split is in the ratio of 1:10 which means that every existing equity share having a face value of Rs 10 each will be sub-divided into ten equity share shares having a face value of Re 1 each fully paid-up. The company's equity shares paid-up value is Rs 964,157,160 at a face value of Rs 10 per share.

Generally, listed companies declare a stock split of already owned shares into much smaller shares. This is done to improve liquidity by breaking the shares into smaller sizes. The face value of the shares reduces in proportion to the split ratio, however, there is no impact on the company's share capital and reserves. Although the price value of a stock reduces in a stock split, the number of shares held rises in the investors' portfolio of that specific stock.

Nestle is among the top ten most expensive stocks in the Indian market at present. A stock split will make its share price cheaper and increase retail investors' participation.

Nestle follows a calendar year for reporting its financial results. That being said, the company's sales of products stood at Rs 5,009.52 crore in Q3 of the current year, compared to Rs 4,577.44 crore in Q3 of 2022. Revenue from operations was at Rs 5,036.82 crore in Q3 of 2023, as against Rs 4,658.53 crore in Q2 of 2023 and Rs 4,610.84 crore in Q3 of 2022. Net profit also surged to Rs 908.1 crore in the quarter under review, as against Rs 661.46 crore in Q3 of 2022

In its Q3 results report, Nestle gave a commodity outlook. It said uneven rain and rain deficit are expected to impact the production of maize, sugar, oilseeds and spices which may hurt pricing. Coffee continues to be volatile because of the global supply deficit. The weather during the harvest of the Indian Robusta crop may impact production. Upcoming winter weather may impact wheat production. A healthy milk flush is expected in winter which is expected to keep prices stable.

The company also turned ex-dividend in 2023 for dividend payout to Rs 140 per share amounting to Rs 1,349.82 crore which was paid on and from November 16, 2023.