Fundamentally strong stock jumps after company’s net profit increases by 22% YoY
Fundamentally strong stock jumps after company’s net profit increases by 22% YoY
Beverage Company, which is in the production and distribution of a wide range of non-carbonated drinks, carbonated soft drinks, and packaged water which is sold under trademarks and owned by PepsiCo jumped 2 percent in the intraday trading after releasing its Q3FY24 results.
Varun Beverages has a market capitalization of Rs. 1,91,997 Crores. Its shares were trading at Rs. 591, a 2.2 percent increase from the previous day’s closing price of Rs. 578.20.
The company’s revenue from operations increased by 25.25 percent YoY from Rs. 4,932 Crores in Q3FY24 to Rs. 3,937 Crores in Q3FY23. Their net profit increased 22.32 percent YoY from Rs. 514 crores in Q3FY24 to 628 crores in Q3FY24. The sales volume when compared quarterly has increased 21.90 percent YoY in Quarter three of FY24. For the nine-month result, the company’s EBITDA has increased by 29.50 percent year over year.
Varun Beverages Limited operates as a franchisee of PepsiCo. They produce and distribute a range of carbonated soft drinks, as well as a large selection of non-carbonated beverages which includes drinking water packaged and sold under trademarks owned by PepsiCo.
PepsiCo brands sold and produced by VBL include Diet Pepsi, Pepsi, Mirinda Orange, Seven-Up, Mountain Dew, Mirinda Lemon, Seven-Up Nimbooz Masala Soda Mountain Dew Ice, Sting, Evervess, Slice Fizzy Drinks, and Gatorade.
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Noncarbonated drinks of PepsiCo brands include Tropicana Juices, Tropicana Slice, and Nimbooz. They are into packaged drinking water with their brand Aquafina. VBL has around 31 manufacturing plants in India and over 6 plants across the world (2 in Nepal and 1 each in Sri Lanka, Zambia, Morocco, and Zimbabwe).
The company recognizes its revenue from the manufacturing and sale of beverages only. The Board of Directors approved a Qualified Institutions Placement (QIP) to raise up to Rs. 7,500 crore which is pending shareholder approval.
VBL also commenced commercial production of carbonated soft drinks and packaged drinking water at its new facility in Kinshasa, Democratic Republic of Congo which features two PET lines with a capacity of 550 BPM each.
Additionally, on September 12, 2024, the company executed a sub-division of its equity shares by splitting each existing share with a face value of Rs. 5 into multiple shares with a face value of Rs. 2 to improve accessibility of stock price for investors.
Earlier Brokerage houses like HSBC and Citi had coverage on the stock and issued buy calls. According to Analysts faster adoption and improvement in market share ahead of its competitors will be significant with the Indian Bottling Industry getting more competitive.
Written by Santhosh S
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