Nestle India stock up after shareholders reject plan to raise royalty for Swiss parent

Shares of Nestle India, the domestic arm of the Swiss food and beverage conglomerate, rose during the special trading session on Saturday after the shareholders rejected the proposal to raise royalty fee for the parent entity.

The trading window, as part of the special session, opened from 9:15 am to 10 am. Nestle India's stock rose by 1.25% during the same period to settle at ₹2,499.1 apiece on the National Stock Exchange (NSE).

The shares were expected to edge higher during the second part of the special trading session, scheduled from 11:30 am to 12:30 pm.

The gain comes a day after Nestle India stock dipped by 0.8% to close at ₹2,468.35.

No hike in royalty fee

Following the conclusion of market hours on Friday, Nestle India informed the exchanges that its shareholders have voted against the plan to raise the royalty that is paid to Nestlé S.A, the Vevay-headquartered parent firm, to 5.25%.

At present, the company pays an annual royalty of 4.5%. The increase of 0.75% was proposed to be implemented in a phased manner, with the royalty fee increasing by 0.15% each over the next five years.

As per the now-rejected plan, the new royalty fee was to come into effect from July 1.

Notably, Nestle India's standalone net profit in the March 2024 quarter was ₹934 crore, up 27% as against the year-ago period. The packaged food company's revenue during the same period increased 9% year-on-year to ₹ 5,268 crore.

Shares of Nestle India have grown by 15.2% over the past one year, but their value has been eroded by 8.7% in 2024 so far.