Nestle India Shares Rise as Board Clears First Ever Bonus Issue
Introduction
Nestle India has taken a significant step by approving its first ever bonus share issue. The company’s board sanctioned a 1:1 bonus issue, meaning shareholders will receive one additional share for every share they currently own. This announcement has triggered a positive reaction in the market, with Nestle India’s share price rising noticeably.
Details of the Bonus Issue
Bonus Ratio: 1:1 (one bonus share for each existing share)
Capitalization: Bonus shares will be issued by capitalizing the company’s retained earnings
Record Date: To be announced by the company
Total Shares Issued: Approximately equal to the current outstanding shares
The issuance of bonus shares does not involve any cash outflow from the company but rewards shareholders by increasing the number of shares they hold, enhancing liquidity and investor confidence.
Market Reaction
Following the announcement, Nestle India’s shares saw a surge, reflecting investor optimism. The bonus issue is perceived as a signal of the company’s strong financial health and its commitment to rewarding shareholders.
Impact on Shareholders
Increased Shareholding: Shareholders get additional shares at no extra cost
Improved Liquidity: The rise in the number of shares can lead to better trading liquidity
No Immediate Change in Value: Although the number of shares increases, the overall market value of the shareholder’s investment remains the same immediately after the bonus issue
Frequently Asked Questions (FAQs)
Q1: What is a bonus share issue?
A bonus share issue is when a company issues additional shares to its existing shareholders without any cost, based on the number of shares they already hold.
Q2: How does the bonus issue affect my investment value?
The overall value of your investment remains unchanged immediately after the bonus issue, but the number of shares you own increases.
Q3: When will the record date for the bonus issue be announced?
The company will announce the record date soon, which determines the shareholders eligible to receive the bonus shares.
Q4: Do I need to apply to receive bonus shares?
No, bonus shares are credited automatically to the shareholders’ demat accounts based on their holdings on the record date.
Q5: Why do companies issue bonus shares?
Companies issue bonus shares to reward shareholders, increase liquidity in the stock, and demonstrate strong financial health.
Published on: June 26, 2025
Uploaded by: PAVAN
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