Nestle India Unveils 1:1 Bonus Issue Amid Revenue Growth and Profit Decline

Nestle India, in a strategic move aimed at enhancing market participation and liquidity, has announced its first-ever 1:1 bonus issue, marking August 8 as the record date. Shareholders will be allotted one additional share for each share they hold. This development coincides with the company's steady revenue growth, juxtaposed against a recent dip in quarterly profit. Despite a 13.4% decline in consolidated profit to Rs 647 crore compared to the previous year, Nestle India reported a 6% increase in operational revenue, reaching Rs 5,096 crore.

This bonus share issue represents a pivotal moment in Nestle India’s corporate trajectory, as it seeks to broaden the scope of investor participation. The firm's decision to double its equity shares reflects a conscious effort to improve stock liquidity and accessibility to smaller investors, potentially dismantling historical barriers posed by high share prices relative to its FMCG peers. Under the SEBI's T+1 settlement system, August 7 was the deadline for acquiring shares to qualify for this bonus allotment.

Nestle India's recent financial performance underscores varied trends within its quarterly results. For the quarter ending June 2025, the company recorded a consolidated revenue of Rs 5,096.16 crore, comparing favorably to Rs 4,813.95 crore for the same period in 2024, although lower than Rs 5,503.88 crore reported for March 2025. The net profit for the quarter was Rs 659.23 crore, a decline from Rs 746.60 crore in June 2024. Earnings per share (EPS) decreased to Rs 6.71 from Rs 7.74 year-over-year.

On an annual basis, Nestle India's financial results reveal a decrease in both revenue and net profit in 2025 compared to 2024. The company’s consolidated revenue for 2025 was Rs 20,201.56 crore, down from Rs 24,393.89 crore in 2024, while net profit fell from Rs 3,932.84 crore to Rs 3,231.54 crore. Correspondingly, EPS dropped from Rs 40.79 to Rs 33.27. Despite this, the book value per share (BVPS) improved from Rs 34.65 to Rs 41.59, while the return on equity (ROE) decreased from 117.71% to 79.98%. Furthermore, the debt-to-equity ratio rose from 0.01 to 0.19.

Subsequent to the bonus issue announcement, Nestle India shares opened nearly 50% lower, adjusting from Rs 2,234.6 to Rs 1,122 per share. This adjustment reflects the proportionate change due to the bonus share allotment rather than an intrinsic loss in market value, maintaining the overall investment value for shareholders. Consequently, a shareholder previously holding 50 shares would see their holdings double to 100 post-bonus, preserving the initial investment value. At the close of trading, shares were valued at Rs 1,096.50, a slight decrease from the adjusted previous close.

The bonus issue involves distributing 96,41,57,160 new shares with a face value of Re 1, amounting to Rs 96.41 crore, sourced from the company’s free reserves. Following this issuance, the company's paid-up share capital will increase to Rs 192.83 crore, with bonus shares expected to be credited on or before August 25, 2025.

Nestle India's approach of issuing bonus shares is designed not only to make its stock more appealing and affordable to investors but also serves as an endorsement of the company's robust financial health and optimistic earnings outlook. Despite underperformance against broader market trends over various timelines, Nestle India’s decision is perceived as a strategic measure to bolster shareholder confidence and enhance future capitalisation.