Varun Beverages spurts 4% after stock split

The stock with face value of Rs 10 has been split into two shares of Rs 5 each after the shareholders of the Pepsi bottler approved the proposal on June 2

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Shares of Varun Beverages climbed 4.31 percent in the early trade on June 15 – the ex-date for the Pepsi bottler’s stock split. The stock with a face value of Rs 10 has been split into two shares of Rs 5 each.

The scrip was trading at an adjusted price of Rs 842.05 at 9.54 am on BSE, compared to an adjusted price of Rs 807.25 in the previous session. It closed at Rs 1,614.45 on June 14.

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Shareholders of the Pepsi bottler approved the stock split proposal on June 2. Companies often choose to split the stock to lower the trading price and bring it into a more comfortable range for investors, thus increasing the liquidity in the counter.

For the March quarter, Varun Beverages reported a 68.8 percent year-on-year growth in consolidated profit at Rs 429.07 crore, driven by strong topline growth, improved margins and transition to a lower tax rate.

Consolidated revenue from operations came in at Rs 3,893 crore, up by 37.7 percent from the year-ago quarter, supported by robust volume growth and an increase in net realisation, the company said in an exchange filing on May 2.

Sting-ing it

Varun Beverages is the second-largest bottling company of PepsiCo’s beverages in the world outside the US.

Also read: Foreign investors flocked to Varun Beverages, Britannia in past three years

“The company witnessed strong demand across regions despite weather disruption in Mar’23. It continues to maintain its growth momentum guidance for CY23 led by robust on-ground execution, expanding manufacturing capacities, and increasing distribution reach,” Axis Securities said in a recent note.

The company is expected to perform well on account of factors like market share gains of newly acquired territories post COVID-19 disruptions and expanding high-margin Sting energy drink across outlets coupled with increased focus on expansion of value-added dairy, sports drink (Gatorade), and juice segment, it added.

Due to the higher mix of Sting, the company’s net realisation per case came in at Rs 174 for Q1 CY23, up 10 percent year-on-year.

Sting, along with other energy drinks, will account for 15 percent of the portfolio, Varun Beverages Chairman Ravi Jaipuria said in the latest earnings call.

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