Shares of the food and beverage giant, a partner of PepsiCo, surged over 6 percent to an intraday high of Rs.665.65 per share on the first day of trading after a 2:5 stock split.
Share Price Variation
In Thursday’s trading session, Varun Beverages Ltd.’s share price reached an intraday high of Rs.665.65, reflecting a 6.06 percent increase from its previous close of Rs.627.6. The price has since retreated to Rs.656.8 per share.
Since its listing on 8th November 2016, the stock has delivered impressive returns of over 2000 percent and is expected to continue growing with similar potential.
What happened
Following the stock split, Varun Beverages Ltd., a key bottling partner for PepsiCo Ltd., saw over 6 percent increase in its share price on the first trading day after the split.
The board of directors had set Thursday, September 12, 2024, as the ‘Record Date’ for the subdivision of existing equity shares from a face value of Rs.5 each to Rs.2 each.
The company explained that this split is intended to improve liquidity and attract small investors by making the shares more accessible and appealing.
Stock split history
Since its listing in 2017, Varun Beverages Limited (VBL) has undergone two stock splits. The first split occurred in 2023 when one equity share with a face value of Rs.10 was divided into shares with a face value of Rs.5 each.
The most recent split took place on 30th July 2024, where one equity share with a face value of Rs.5 was split into shares with a face value of Rs.2.
Future Outlook and Expansion
Varun Beverages Limited (VBL) is expanding its global footprint with a new facility in Kinshasa, Democratic Republic of Congo, which began production on 22nd July 2024. This plant will produce carbonated soft drinks and packaged drinking water with two PET lines, each having a capacity of 550 BPM.
Additionally, VBL has secured an exclusive franchising agreement with Premier Nutrition Trading LLC, a PepsiCo subsidiary, to manufacture and distribute “Simba Munchiez” in Zimbabwe and Zambia.
The company will invest approximately $7 million (Rs.600 million) in each facility, with operations expected to start in Zimbabwe by 1st October 2025 and in Zambia by 1st April 2026.
Market presence
Varun Beverages Ltd. is a significant player in the Indian beverage industry and ranks among the largest PepsiCo franchisees globally, outside the USA. The company produces and distributes a wide range of carbonated soft drinks (CSDs) and non-carbonated beverages (NCBs), including packaged drinking water under PepsiCo trademarks.
Brand Portfolio
PepsiCo CSD brands manufactured and sold by VBL include Pepsi, Pepsi Black, Mountain Dew, Sting, Seven-Up, Mirinda, Seven-Up Nimbooz Masala Soda, and Evervess.
The NCB brands produced and sold by VBL encompass Slice, Tropicana Juices (100 percent and Delight), Seven-Up Nimbooz, Gatorade, and packaged drinking water under the Aquafina brand.
Financial Performance
In its recent financial update, Varun Beverages Ltd. reported net sales of Rs.7,197 crore for Q1 FY25, representing a 28.3 percent increase from Rs.5,611 crore in the same quarter last year. The company’s net profit for the quarter was Rs.1,262 crore, up from Rs.1,005 crore in Q1 FY24, reflecting a 25.6 percent increase.
Company Overview
Varun Beverages Ltd. is a leading franchisee of PepsiCo, primarily engaged in the manufacture and distribution of a wide range of carbonated and non-carbonated beverages, including popular brands like Pepsi, Mountain Dew, and Tropicana.
Investors can consider maintaining their investment in Varun Beverages (VBL) post-stock split due to the company’s strong growth momentum and strategic expansion plans, which include increasing distribution reach and entering new markets.
Written by – Siddesh S Raskar
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