2:5 Split In 2024: FMCG Giant Okays Rs 7,500 Cr Fundraise, Buy Suggested For TP Rs 800

Large cap FMCG company Varun Beverages Ltd shares today zoomed 1.20% after the Board of Directors considered and approved raising of funds by way of issuance of Equity Shares for an aggregate amount not exceeding Rs. 7,500 crore, in one or more tranche(s), through Qualified Institutions Placement ('QIP'). Current market price of Varun Beverages Ltd shares on BSE is Rs 598.15 apiece. The company earlier this year had declared stock split in the ratio of 2:5 and shares traded ex-split on September 12, 2024. The company's market on BSE stood at Rs 1,94,303.40 crore. It also declared Rs 1.25 per share and fixed August 9, 2024 as the record date.

VBL Approves Fundraise: As per the exchange filing of Varun Beverages Ltd dated Oct 9, 2024, "The Board of Directors of Varun Beverages Limited (our Company) at their meeting held today (started at 09:30 A.M. and concluded at 09:45 A.M.) inter-alia considered and approved the following:

(i) Raising of funds by way of issuance of Equity Shares for an aggregate amount not exceeding Rs. 7,500 Crore (Rupees Seven Thousand Five Hundred Crore only), in one or more tranche(s), through Qualified Institutions Placement ("QIP"), subject to receipt of approval of Equity Shareholders of the Company through Postal Ballot and any other regulatory/ statutory approvals (if any)."

(ii) Notice of Postal Ballot for seeking approval of Equity Shareholders in respect of raising of funds by way of issuance of Equity Shares through QIP."

Varun Beverages Stock Split In 2024: As per the regulatory filing of Varun Beverages dated September 2, 2024, "fixed Thursday, September 12, 2024 as the "Record Date" for determining entitlement of Equity Shareholders for the purpose of sub-division / split of existing Equity Shares of the Company, such that each Equity Share having face value of Rs. 5/- (Rupees Five only) each fully paid-up, be subdivided/split into such number of Equity Shares having face value of Rs. 2/- (Rupees Two only) each fully paid-up."

Varun Beverages Dividend: the Board of Director's approved an interim dividend @ 25% of face value i.e. Rs. 1.25 per share. Total cash outflow would be ~Rs. 1,624.30 million on July 30.

VBL Dividend History: Varun Beverages recommended a total of 10 dividends since August 16, 2017. In last 1-year, Varun Beverages announced an equity dividend amounting to Rs 2.50 per share. At the current share price of Rs 598.15, Varun Beverages offers a dividend yield of 0.42%. Adjusting for Bonus/Splits the dividend yield is 0.17%.

Varun Beverages Shares Performance & Return: The 52-week high price of Varun Beverages shares on BSE is Rs 682.84 per share (as on 29/07/2024) and 52-week low price is Rs 331.28 per share (as on 26/10/2023), respectively. Varun Beverages shares gained 21% year-to-date, rallied 62% in last 1-year, and soared 397% in last 3-years. Varun Beverages shares offered phenomenal returns of 987% in last 5-years.

Shareholding Pattern: FII/FPI have decreased holdings from 25.79% to 25.32% in Jun 2024 qtr. Number of FII/FPI investors increased from 1112 to 1158 in Jun 2024 qtr. Mutual Funds have increased holdings from 2.26% to 2.42% in Jun 2024 qtr. Number of MF schemes increased from 31 to 33 in Jun 2024 qtr. Institutional Investors have decreased holdings from 29.95% to 29.86% in Jun 2024 qtr. Government pension fund global has 2.36% stake in Varun Beverages.

Should You Buy VBL Shares? Brokerage firm Citi issued buy call with target price of Rs 800 per share. HSBC also initiated coverage on Varun Beverages shares and recommended buy call with target price of Rs 780 per share. According to the analyst, "speed & market share can be picked up if co adopts tools ahead of its competitors."

Varun Beverages Q2 Results: It declared revenue from operations soared 28.3% Year-On-Year (YoY) to Rs 7196.86 crore in Q2 as against Rs 5,611.40 crore announced in the corresponding quarter of last year. Ravi Jaipuria, Chairman, Varun Beverages Limited said, "We are pleased to report robust performance for the second quarter of CY2024, achieving a consolidated sales volume growth of 28.1%, which includes volumes from BevCo. The impressive volume growth of 22.9% in India primarily contributed to this outstanding performance, supported by our expanded capacities, enhanced distribution network, and a strong summer season. Meanwhile, our international markets remained relatively flat, moreover it was a seasonally weak quarter for African market."

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 has been picked from the brokerage report of HSBC Securities and CITI. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.