Shares of this beverage stock under the ‘large-cap’ category spiked approximately 11 percent in Wednesday’s trading session after the company’s exchange filing provided multiple business updates. The company’s stock jumped close to 60 percent in the last six months.
With a market capitalization of Rs 1.69 lakh crores, the stocks of Varun Beverages Limited started their trading session on Wednesday at Rs 1,350 and currently trades at Rs 1,302.55, gaining around 11 percent compared to the previous closing levels of Rs 1,172 apiece.
Such sharp stock price movements are witnessed today after the company, through a regulatory filing with the Bombay Stock Exchange (BSE), provided a couple of business updates.
Firstly, the company intimated that its Board, in a meeting held on 19th December 2023, approved the acquisition of a 100 percent stake in “Beverage Company (Proprietary) Limited”, a South Africa-based company engaged in the business of manufacturing and distributing non-alcoholic beverages.
The acquirer company has agreed to a cash consideration of approximately ZAR 3 Billion, viz, 13.20 Billion Rupees. The same will be executed on or before 31st July 2024
The target company will be fully acquired and its wholly-owned subsidiaries to enable Varun Beverages to expand its geographical footprint in Africa. The revenue of the target company during the past three financial years (July-June) is ZAR 2,854 mn, ZAR 3,189 mn, and ZAR 3,615 mn respectively.
In addition to the above update, another exchange filing of the large-cap company intimated about a Memorandum of Understanding (MOU) with the ‘Government of Jharkhand’ for a manufacturing plant in the state with a total capital outlay of around Rs 450 crores subject to necessary approvals.
During the recent financial quarters, the company faced a dip in the basic business parameters such as operating revenues and net profits.
The former moved down from Rs 5,699.73 crores during Q1FY23-24 to Rs 3,937.76 crores during Q2FY23-24, and the latter, during the same period, nearly halved from Rs 1,005.66 crores to Rs 514.48 crores.
Varun Beverages Limited (VBL) is engaged in the business of manufacturing, selling, bottling, and distributing beverages under the ‘Pepsi’ brand. Generating a majority of its revenue from operations within India, the company also conducts business in various pre-defined territories of Sri Lanka, Morocco, Nepal, etc.
Written by Amit Madnani
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