The shares of Nestle India rose on hopes of another block deal in next few days during intra-day trading but ended flat on profit booking. The scrip hit an intra-day high of Rs 568.40 before settling at Rs 552.45 amid a massive volume of 5.58 lakh shares on the Bombay Stock Exchange (BSE).
The market grapevine has it that another block deal at around the Rs 585-590 levels is in the offing in Nestle as the parent, Swiss multinational Nestle SA, is keen on mopping up the subsidiary's shares further.
Last Friday, Nestle SA acquired a large chunk of Nestle shares on BSE in a block deal at Rs 570 per share (the then prevailing market price was around Rs 525) .
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Institutional investors such as Unit Trust of India and few other mutual funds were among others are believed to have sold shares to the parent (which acquired these through creeping acquisition).
Dealers say the institutions were lured by the parent's eagerness to acquire these shares even at a premium to the prevailing market rate.
Nestle has already sought approval for hiking stake through the creeping acquisition route. As on 30 June 2002, the promoters' holding in Nestle was 54 per cent.
During the quarter ended June 2002, Nestle registered a sharp 42 per cent increase in net profit to Rs 63.72 crore on a 9 per cent growth in net sales to Rs 511.48 crore. The company attributed this increase in net profit to higher sales, improved cost control over fixed cost and benefits resulting from favourable commodity prices which have already firmed up.
Nestle India is a fast growing FMCG major, which occupies a leading position in the processed foods industry. Its products span coffee, chocolates, milk and baby foods and culinary products.
It is renowned for its brands such as Nescafe, Kit Kat, Polo, Munch, Milo, Lactogen, Cerelac and Maggi. The company has also entered the packaged milk and bottled water markets in a big way. The parent, Swiss food major Nestle, has already increased its stake to 54 per cent in Nestle India.
Nestle also plans to commission research in India on matters of nutrition and health and will actively work towards leveraging the knowledge into development of new product formulations.
Nestle is now planning to enter the biscuit segment in India. It is interested in foraying into premium products like cookies.