Nestlé S.A. buys more shares in Sri Lankan venture increasing stake to 49.3 million shares
Nestlé S.A. has increased its stake in the Sri Lankan venture – Nestle Lanka – by buying 295,078 shares, thereby increasing its stake to 91.76% or 49.3 million shares.
According to a news report on Daily FT, Nestlé has witnessed 332,527 shares change hands via 751 trades for Rs. 403 million during last week. A big block of 295,385 was done at Rs. 1,200 each and it had closed the week up Rs. 75.50 to Rs. 1,300.75 with an intra-week high of Rs. 1,400 though on Friday it had dipped by 1% or Rs. 12.75. Nestlé’s 52-week highest price is Rs. 1,650 and the lowest was Rs. 950, the news report further stated.
In June, Nestlé S.A. had acquired 211,410 shares bringing the stake to 91.21%. Public holding percentage of Nestlé Lanka is 8.79% held by 5,908.
Speculating a de-listing as well as given its high dividend yield, some high net worth investors have renewed focus on Nestlé.
Nestlé had also recorded a growth in earnings for 2Q 2021 up by 41.9% YoY to Rs. 844.3 million compared to Rs. 594.9 million recorded in 2Q2020.
“The escalation in profit is mainly attributable to the surge in revenue by 22.4% to Rs. 10.1 billion as opposed to Rs. 8.3 billion in 2Q2020, aided by the increase in prices pertaining to some of its popular products due to the continuous pressure stemming from the increase in raw material prices amidst the stagnant growth in volumes,” First Capital has been quoted as saying in the Daily FT news report.
Accordingly, it has squeezed GP margins estimate to a range of 33%-34% (previously at 36%) for 2021 and 2022. “Thus, we are reinstating our earnings forecast while revising the profitability targets for 2021 and 2022 to Rs. 4.1 billion and Rs. 5.2 billion, respectively,” First Capital has added.
OSL take:
The increase of stakes in a local venture held by a multinational in Sri Lanka is indicative of the growing business confidence on the local business potential. Sri Lanka’s economy has shown great resilience amidst the global Covid 19 pandemic with several key economic sectors showing a growth while many private sector companies have shown an increase in revenue. Sri Lanka with its ongoing development programme and business conducive environment supported by strong trade ties has helped the country become an emerging business destination in the South Asian region. Foreign businesses/investors could therefore explore the growing business/investment opportunities in Sri Lanka.
| Article Code : | VBS/AT/15092021/Z_5 |