 "Nestle surges 4%, nears 52-wk high ahead of record date for dividend payout")
Shares of Nestle India surged 4 per cent to Rs 20,229.95 on the BSE in Monday’s otherwise weak intra-day trade ahead of its record date of Friday, April 21 for a dividend of Rs 102 per share. In comparison, the S&P BSE Sensex was down 1.1 per cent at 59,764 at 11:48 am.
The stock of the packaged foods was trading close to its 52-week high level of Rs 21,053, touched on October 24, 2022. It has recovered 12 per cent from Rs 18,002.80 on March 15, 2023.
The board of Nestle India on April 12, 2023 declared an interim dividend of Rs 27 per equity share of Rs 10 each for the year 2023. Earlier, on February 16, 2023, the board recommended final dividend for the year 2022 of Rs 75 per equity shares of Rs 10 each.
“Interim Dividend for the year 2023 will be paid on and from May 8, 2023 along-with the final dividend for the year 2022, if approved by the members at the 64th Annual General Meeting scheduled to be held on April 12, 2023, to those members whose names appear in the Register of Members of the Company and as beneficial owner in the records of the depository, as on the Record Date fixed for the aforesaid purpose i.e. April 21, 2023,” Nestle India said in exchange filing on April 12.
Nestle India manufactures products under four categories: milk products and nutrition, powdered and liquid beverages, prepared dishes and cooking aids, and chocolates and confectionery. Consumer preferences and sensitivities are fast evolving. Speed of consumer shifts is expected to increase even further with easier access to information, rising demand to know more and seek more choices based on their preferences, the company said in CY22 annual report.
The company will continue to benefit from its leading market position in the key FMCG segments, healthy operating efficiency and strong parent support. The financial risk profile is expected to remain healthy over the medium term, supported by adequate cash flow and healthy capital structure, according to rating agency Crisil.
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The long-term narrative for revenue and earnings growth for Nestle India is highly attractive. Companies such as Nestle India with a strong pedigree and distribution strength are expected to benefit significantly from the immense growth prospects of the packaged foods segment in India. Further, the successful implementation of the company’s volume-led growth strategy in recent years provides confidence in execution as well, according to Motilal Oswal Financial Services.
Meanwhile, in January-March quarter (Q1CY23), Nestlé India is expected to maintain strong growth momentum with 12.8 per cent sales growth led by mix of volume & pricing growth. Maggi noodles & chocolate categories are expected to grow at faster pace but milk & related product categories to see moderate sales given high milk prices are adversely impacting growth.
Analysts at ICICI Securities estimate gross margin contraction of 173 bps in Q1CY23. Operating profit is estimated to grow 3.9 per cent with a contraction of 186 bps in operating margins to 21.5 per cent. The brokerage firm estimates 7.7 per cent growth in net profit to Rs 640.3 crore.