Nestle India share price will react according to the bonus issue announcement on June 26. The stock price witnessed sharp buying on June 25, with an upside of 1.5% on BSE. Compared to its peers like ITC, this will be Nestle's first bonus issue. Some of the most commonly announced bonus ratios are 1:2, 1:1, 1:3, 1:4 and 1:5. Nestle's bonus ratio will be eyed by investors on Thursday.
Bonus Shares Meaning:
Bonus shares are one of the many corporate actions that listed companies announce on several occasions. Bonus shares are like incentives that are free of cost given to investors. Under this corporate action, new shares are issued at the existing Face Value of equity shares of the company. Hence, the face value remains the same post-bonus issue.
Bonus Shares Ratio:
Some of the very popular bonus shares ratios that listed companies across markets announce are --- 1:1, 1:2, 1:3, 1:4 and 1:5 among others. There are also bonus issues in the ratio of 4:1, 3:1, 5:1, 1:10 and much more. Bonus shares ratio varies from company to company and the decision is made by board of directors of that respective company.
How investors benefit from bonus shares?
Bonus issues multiply the number of shares held in the company. The face value remains the same, however, stock is adjusted accordingly.
For instance, a 1:1 bonus issue ratio would mean that eligible shareholders will get 1 free shares on their existing 1 equity share. So for instance you had 100 shares in a company and you were eligible for the bonus, then at ratio of 1:1, you will receive 100 free shares on your existing 100 shares, taking the total number of shares to 200.
If we consider higher bonus ratio such as 4:1, then the company issues four new bonus shares compared to 1 existing equity share. So let's suppose, if you had 500 equity shares of a company, and were eligible for the bonus issue of 4:1, then you will receive 2000 equity shares (2,000 X 4/1).
Nestle India Bonus Issue:
In its regulatory filing, Nestle said, "This is to inform you that a meeting of the Board of Directors of the Company is scheduled to be held on Thursday, 26th June 2025, to inter-alia consider and approve the proposal for issue of bonus shares, subject to requisite approvals."
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This will be the first bonus issue of Nestle. This also comes after Nestle carried its first stock sub-division in January 2024, in the ratio of 1:10.
If Nestle announces a bonus issue, its stock price will be adjusted accordingly. Since its stock split, Nestle has delivered a total of Rs 42.5 dividend to its investors.
In 2025 alone, the company announced a Rs 24.25 dividend per share. Of this total, Nestle is yet to turn ex-dividend for a dividend of Rs 10 per share whose record date is fixed on July 4, 2025.
Nestle India Share Price:
Ahead of its bonus issue meeting, Nestle's stock price witnessed sharp buying sentiment on June 25. The stock rallied by nearly 2% to close at Rs 2,409.05 apiece on BSE, which was near its intraday high of Rs 2,429 apiece. The market cap of Nestle India is nearly Rs 2.32 lakh crore. It has a strong return on equity of 83.06%.
Let's check out Nestle's peers and their bonus issue history:
Hindustan Unilever Bonus Issue:
The company has never carried a bonus shares corporate action.
ITC Bonus Issue:
Unlike HUL and Nestle, ITC is among top bonus issuing FMCG stock. Its first bonus issue was of 1:2 ratio and delivered in September 2005. Later on, ITC delivered 1:1 bonus issue in August 2010 and 1:2 bonus in July 2016.
As per Religare Brokerage, the following are the impact of bonus shares on investors:
1. No Tax Liability: Unlike taxable dividends, bonus shares have no immediate tax implications for the shareholder.
2. Capital Appreciation: Over the long term, as the company continues to grow, the value of the original and bonus shares may appreciate, offering higher returns.
3. Increased Ownership: The issuance of bonus shares increases a shareholder's stake in the company without requiring additional investment.
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