503% Gain In 3-Yrs: After 1:2 Stock Split, FMCG Stock Jumps 11% On South African Deal

Shares of large cap FMCG company Varun Beverages witnessed a surge of 10.94% intraday today after the company informed BSE via a regulatory filing that it seeks to acquire a 100% stake in South-Africa based The Beverage Company along with its wholly-owned subsidiaries BevCo. Varun Beverages shares BSE rallied 19% in last 1-week and soared 96% year-to-date. Current market price of Varun Beverages share on BSE is Rs 1300.25 apiece with intraday gain of 10.94%.

According to the BSE filing dated December 19, 2023, "The Board of Directors of the Company at their meeting held today (started at 11:00 A.M. and concluded at 11:30 A.M.) inter-alia considered and approved to acquire 100% stake in the business conducted by The Beverage Company (Proprietary) Limited, South Africa along-with its wholly-owned subsidiaries (hereinafter referred as "Bevco") with an option to accept minority coinvestment from large equity fund subject to regulatory and other approvals (if any) including but not limited to PepsiCo Inc. and Competition Commission South Africa."

Bevco is engaged in the business of manufacturing and distribution of licensed (PepsiCo Inc.) / own-branded non-alcoholic beverages in South Africa. Bevco has franchise rights from PepsiCo Inc. in South Africa, Lesotho and Eswatini. Further, it also has distribution rights for Namibia and Botswana.

The proposed transaction is at an Enterprise Level and is valued at ZAR 3 billion (Rs 1,320 crore; 1 ZAR = Rs 4.4). BevCo achieved net revenue of ZAR 3,615 million or Rs 1,590 crore in FY23, added the company's BSE filing.

Varun Beverages Inks MoU With Jharkhand Govt: The company in its BSE filing dated December 19, 2023 stated, "We would like to inform you that our Company has signed a Memorandum of Understanding (MOU) with Government of Jharkhand on December 18, 2023 for our proposed manufacturing plant in Patratu, Jharkand with a total capital outlay of app. Rs. 450 Crore (Rupees Four Hundred and Fifty Crore only) (subject to necessary approvals) when fully commissioned in due course."

Varun Beverages Stock Performance & Return: The stock's 52-week high price is Rs 1380.45 per share and 52-week low price is Rs 550.00 per share, respectively. The company has a market capitalisation of Rs 1,69,001.88 crore. Varun Beverages shares opened at 1350.00 per share, touched day's high of Rs 1380.45 per share, and day's low of Rs 1282.40 per share, respectively. Varun Beverages shares soared 87% in last 1-year, gained 371% in last 2-years only, and offered return of 503% in last 3-years.

Varun Beverages Carried Out Stock Split In June 2023: Earlier this year, Board of directors of Varun Beverages fixed June 15, 2023 as the record date for 1:2 sub-division of shares. As per the BSE filing of the company, "the Board of Directors fixed Thursday, June 15, 2023 as the 'Record Date' for determining entitlement of Equity Shareholders for the purpose of sub-division / split of existing Equity Shares of the Company from 1(One) Equity Share having face value of Rs. 10/- (Rupees Ten only) each fully paid-up, into 2 (Two) Equity Shares having face value of Rs. 5/- (Rupees Five only) each fully paid-up, as approved by the Equity Shareholders through Postal Ballot on June 2, 2023."

Varun Beverages About: Varun Beverages Limited ("VBL" or the "Company") is a key player in beverage industry and one of the largest franchisee of PepsiCo in the world (outside USA). The Company manufactures, distributes and sells a wide range of carbonated soft drinks (CSDs), as well as a large selection of non-carbonated beverages (NCBs), including packaged drinking water sold under trademarks owned by PepsiCo, according to its LinkedIn page.

Disclaimer:

The stock highlights the rally in share after South African deal and is not a recommendation to buy, sell or hold. We have not done fundamental or technical analysis and have no opinion on the stock mentioned. Neither, the author nor Greynium Information Technologies should be held liable for any losses. Please consult a professional advisor.