Nestle shares soar over 3% on buzz of acquisition of Ching’s

FMCG major Nestle India shares on Friday gained more than 3 per cent on Friday following a report that parent Nestle SA is among the final bidders for Capital Foods Pvt Ltd, which owns the famous Ching’s Secret brand.

On BSE, Nestle India shares ended 3.29 per cent up at ₹19,680. It touched intraday high of ₹19,751.90.

Nestle SA holds 34.28 percent stake in Nestle India and Maggi Enterprises Ltd 28.48 percent. The rest is held by public shareholders. Nestle SA is among final bidders competing to acquire India’s Capital Foods Pvt which owns the famous Ching’s Secret brand. Any transaction would likely value the Indian firm at more than $1 billion, reported news agency Bloomberg.

Investors in Capital Foods include General Atlantic, which bought a stake in the company in 2018.

Nestle India Ltd’s CY22 annual report sheds light on volume performance across product groups. This data is not made available during the interim results. The packaged food company follows the January-to-December financial year. In 2022, overall volume grew by 5.2% year-on-year (y-o-y). This product category comprised 61% of Nestle India’s overall volumes. One factor that has weighed on this category is the adverse demand impact due to sharp price hikes in low-unit packs of Maggi noodles.

Further, milk products and nutrition volumes in 2022 were down 0.5% y-o-y, marking the third consecutive year of decline. Other verticals, beverages and confectionery, saw relatively higher volume growth of 12-14%. To fight commodity cost inflation, Nestle India resorted to price hikes across categories. Overall, revenue growth stood at 14.5%, the highest in a decade.

FMCG major Nestle India reported a net profit of ₹628 crore in the fourth quarter of CY22 (Q4CY22), up 66% year-on-year (YoY). It was ₹379 crore in the year-ago period.

The shares of Nestle’s India have gained 12.09 per cent over the past 12 months, giving it a market value of about ₹1,89,860.38 crore.