Retail investors who could not lay their hands on Nestle India shares given its high price have a ray of hope. The board of directors of the FMCG giant is meeting on October 19 to consider a stock split. At the meeting, its board will also consider a second interim dividend.
“The board of directors to inter-alia consider the following proposals — declaration of second interim dividend for the year 2023, if any, and alteration in the share capital of the company by sub-division/split of existing equity shares,” Nestle India said in a regulatory filing.
The announcement sent the shares of the company rising in an otherwise weak market. The shares ended at Rs 22,988.65 on the BSE, marking a gain of Rs 650.50, or 2.91 per cent, over its previous close.
The company has a market cap of nearly Rs 2,21,647 crore.
In a stock split, the face value of a company’s share is reduced, thereby increasing the floating or outstanding stock (without impacting its market cap) and making it more affordable to retail investors.
While the face value of Nestle’s share is currently at Rs 10 per share, it has the option to either reduce it to Re 1, Rs 2, or Rs 5 per share.
If the first option — Re 1 — is exercised, the price of the share will come down to Rs 2,298. The price will be Rs 4,597, if the company reduces the face value to Rs 2; and Rs 11,494, if the value is Rs 5.
