Nestle India hits new high of Rs 20,000; stock up 13% so far in August

Shares of Nestle India continued their upward trajectory, hitting a new high and Rs 20,000 mark for the first time on Friday as the stock rose 1 per cent on the National Stock Exchange (NSE) amid expectations of healthy revenue growth. The stock of the packaged foods company surpassed its previous high of Rs 19,641.10 touched on Friday, August 20, 2021.

Thus far in the month of August, Nestle India has rallied 13 per cent, as compared to a 5.6 per cent rise in the Nifty50 index. For the April-June 2021 quarter (Q2CY21), Nestle India had reported slightly better-than-expected revenue growth of 13.8 per cent year-on-year (YoY) on a base impacted by COVID-19 induced lockdown, with production disruptions across factories.

Domestic revenue growth was up by 13.7 per cent YoY, driven by volume and mix, albeit on a low base. Key products (in-home consumption) sustained traction and posted strong double-digit growth.

Analysts at HDFC Securities expect the company to continue its growth in in-home products, aided by its e-commerce and hyperlocal channels and, with markets opening up, we expect to see recovery in the out-of-home (OOH) segments.

Meanwhile, Nestle India on July 29, 2021, had said the board has approved the scheme of arrangement, which envisages the transfer of the entire balance of Rs 837.43 crore standing to the credit of the general reserve to the retained earnings. The scheme is subject to regulatory approvals.

Given the company's strong financial position and track record of cash generation, the funds represented by such accumulated General Reserves is seen to be in excess of the company's current and anticipated needs, Nestle India said.

In view of this and to uphold good corporate governance, the company has proposed the Scheme and is available for utilisation by the company for payout to the members in accordance with the terms of the Scheme. The Scheme, besides being shareholder-friendly, will also drive the efficiency of the company's Balance Sheet, the company said.

At 01:15 pm, Nestle India was trading 1 per cent higher at Rs 19,755 on the NSE, as against a 0.31 per cent rise in the Nifty50 index. Around 98,000 equity shares had changed hands on the counter on the NSE and BSE so far.