Varun Beverages rallies 7% as stock turns ex-split. What should investors do?

Shares of Varun Beverages rallied nearly 7% on Thursday as the stock turned ex-split. The shares were last trading at Rs 828 on NSE, up 2.54% over the previous close.

The FMCG major had announced to split its shares in the proportion of 1:1 and fixed June 15 as the record date for the same.

"The Board fixed June 15 as the record date for determining entitlement of equity shareholders for the purpose of sub-division of existing equity shares of the company from l equity share having face value of Rs 10 each fully paid-up, into 2 equity shares having face value of Rs 5 each fully paid-up," the company had said earlier.


A stock split is usually done to increase the liquidity of the stock in the market. Investors who are holding the stock until the record date will receive the new shares in demat accounts and the stock price will be adjusted according to the split ratio.

One of the largest franchisees of PepsiCo, Varun Beverages, reported a 69% year-on-year increase in its profit at Rs 429 crore for the quarter ended March. The company's revenue from operations grew 38% YoY to Rs 3,952 crore in the quarter.

The management is confident of maintaining double-digit revenue growth momentum on account of on- ground execution capabilities, expanding manufacturing capacities, and increasing distribution reach.

Axis Securities believes Varun Beverages will continue its strong growth momentum on account of normalcy of operation and market share gains of newly acquired territories post Covid-19 disruptions and the management’s continued focus on the efficient go-to-market execution in acquired and underpenetrated territories as reflected in its recently commissioned Bihar plant operations.

Meanwhile, Sharekhan expects the company to deliver a solid 30% CAGR in EPS over CY2022-CY2024E. The brokerage has a positive stance on the stock with a potential upside of 21% over the next 12 months.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)