Nestlé India bonus issue announcement: What does it entail

No one is a stranger to Nestlé India - the powerhouse behind Maggi, Nescafé and many such popular brands. On June 26, 2025, the company made a move that’s unprecedented in its history; it announced a 1:1 bonus share issue, which means investors will get one extra share for every share they already hold. It’s the first bonus issue since 1996 and its latest shareholder gesture since listing on NSE in 2024.

What was decided at the board meeting?

At the June 26 board meeting, Nestlé India approved several key resolutions.

1. Bonus issue in 1:1 ratio
   You receive one bonus equity share (face value ₹1) for every share held as on the record date. A total of 96.41 crore new shares will be issued by capitalizing retained earnings of approximately ₹96.41 crore.

2. Authorised capital increase
   The authorised capital is set to double from ₹100 crore to ₹200 crore, via a proposal that will require shareholder approval.

3. EGM on July 24, 2025
   An Extraordinary General Meeting (EGM) is scheduled for July 24 to approve both the bonus issue and the authorised capital increase.

4. Expected credit date by August 25, 2025
   The company plans to credit bonus shares or dispatch certificates within two months post-board approval, i.e., on or before August 25, 2025.

Why Nestlé India chose to do it now

• Robust balance sheet
  Retained earnings stood at around ₹4,008.95 crore as of March 31, 2025. The bonus issue will tap only ₹96.4 crore of this reserve.

• Enhancing liquidity and retail access
  A 1:1 bonus effectively doubles investor share count and halves the stock’s face, and likely the market price too. That makes Nestlé India shares more accessible and trader friendly.

• Rewarding long-term loyalists
  Outgoing Chairman Suresh Narayanan emphasised that the move recognises the steadfast support and loyalty of shareholders – especially ~1.6 lakh small investors holding fewer than five shares.

What does this mean for you as an investor?

More shares, same value (for now)
You will own twice as many shares in your portfolio, but your investment value doesn’t change immediately. For instance, ₹2,424 for 10 shares = ₹24,240; post bonus, you will hold 20 shares at about ₹1,212 each, which still amounts to ₹24,240.

Better liquidity, more participation
With more shares available and a lower per-share price, you will likely see increased trading volume, attracting new investors while making it easier to buy or sell.

Slight dilution in metrics
Per share indicators like EPS and dividend-per-share will be halved. But since the total profits don’t change, this isn’t a loss in value, just a redistribution across a larger shareholder base.

Possible influence on share indices
Even after exiting BSE Sensex earlier due to index reshuffles, market watchers should note that bonus issues often improve visibility and inclusion chances. Analysts previously speculated ₹200 million outflows, which may be offset by renewed interest.

Market reaction so far

The announcement sparked a clear ripple effect -

• Share price climbed approximately 1–2% on June 26 morning trade.
  
• Throughout the week, the stock rose roughly 3.7–4%, hitting a high near ₹2,454.
  
• Investors welcomed the news as a bullish affirmation of Nestlé India’s fundamentals.
  

How this fits into Nestlé India’s strategy

• January 2024 stock split: Reorganised ₹10 shares into 10 × ₹1 shares, enhancing tradability.
  
• Dividend history: Paid ₹42.5 total during FY25 via multiple dividends, including a ₹10 final dividend.
  
• Steady revenue growth: Q4 FY25 saw revenue at ₹5,504 crore (+4.4%) while profit dropped 5% YoY to ₹885 crore.
  
• Expanding turnover: Sales surged from ₹8,100 crore in 2015 to ₹20,100 crore, thus reflecting deep recovery post Maggi scare.
  

Taken together, the bonus issue signals not just financial strength, but also a focus on enhancing investor value via both cash and equity means.

Here’s what you should do

1. Mark your calendar: Watch for the official record date announcement.
   
2. Prep your Demat: Make sure your holdings are properly reflected and active.
   
3. Use the dip: If the price adjusts post-ex-date and you are bullish, it might be a chance to buy more.
   
4. Follow broad fundamentals: Keep an eye on sales growth, cost structure, competitive environment and industry inflation.
   

Conclusion

This bonus issue is not a one-off move—it is a part of a much broader journey. Nestlé India is using every tool in its arsenal - like stock split, dividends, and now a bonus issue, all signalling confidence in long-term earnings. It has steadily converted retained earnings into investor-friendly moves, without compromising financial health. From a small-retail boost to an index resurgence, this bonus act isn’t just corporate housekeeping, it’s a strategic inflection, putting you, the shareholder, at the heart of its next growth chapter.