Varun Beverages Shares Hit an All-Time High Over Stock Split And a 69% Growth in PAT

Varun Beverages' shares hit an all-time high after quarterly growth and plans of a stock split.

Varun Beverages Ltd, a major distributor franchisee of PepsiCo, saw its shares hit an all-time high after it announced its quarterly growth and planned stock split in the ratio 1:2 and a Re 1 dividend. 

The company’s board of directors, subject to the approval of equity shareholders, has approved splitting existing equity shares from 1 equity share with a face value of Rs 10 each fully paid up into 2 equity shares with a face value of Rs 5 each fully paid-up. 

Furthermore, the company approved a final dividend of Re 1 per equity share with a face value of Rs 10 each for the fiscal year that concluded on December 31, 2022. 

Varun Beverages also announced its consolidated net profit after tax for the quarter ending March 31, 2023, had increased by 69% YoY to Rs 429 crores from Rs 254 crores in the same period of the previous fiscal year. The company’s revenue from operations increased by 38% YoY to Rs 3,952.5 crore for the quarter ending March 2023 from Rs 2,867.4 crore in March 2022. The company’s total expenses increased by approximately 35% to Rs 3,389 crore in the same quarter, compared to Rs 2,514 crore in the previous fiscal year.

In a filing with the exchange, the company stated that demand throughout India’s regions was the primary factor in sales volumes rising by 24.7% to 22.4 crore cases in Q1CY23, up from 17.97 crore cases in Q1CY22. Domestic volumes rose by 28%. The company has also increased its capacity at six existing locations and opened a new production plant in Kota, Rajasthan.

The marginal price reductions in raw materials and the improved product mix were primarily responsible for the 89-basis point increase in gross margins to 52.4% from 51.5% in Q1FY23. EBITDA rose by 50.3% to Rs 798.04 crore in Q1CY23, and EBITDA margins grew by 172 basis points to 20.5% due to enhanced operational efficiency.

Varun Beverages’ stock has delivered over 195% in the last two years and nearly 600% return in the previous five years. It is also up 100% in the past year. Shares of Varun Beverages rose more than 1% in Tuesday’s trade to hit a fresh 52-week high of Rs 1480 following the stock split announcement. The shares then closed 1.47% lower, at Rs 1424.

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