Varun Beverages Shares Surge Amid Fundraising Announcement

Shares of Varun Beverages, the bottler for PepsiCo in India, experienced a notable increase on Tuesday, ahead of a board meeting scheduled to discuss raising funds through Qualified Institutions Placement (QIP). The company’s stock recorded a 9.58% rise, trading at Rs 593.75 in the afternoon session on the Bombay Stock Exchange (BSE), compared to the previous closing price of Rs 541.80.

The board meeting, slated for October 9, 2024, will consider a proposal to raise funds by issuing equity shares through QIP. The announcement noted: “A Notice of Postal Ballot will be issued to seek approval from Equity Shareholders regarding the fundraise.”

Market analysts observed the stock’s technical performance, citing that Varun Beverages’ shares are below several shorter-term moving averages, ranging from the 5-day to the 150-day, yet remain above the 200-day moving average. The relative strength index (RSI) for the stock was reported at 27.6, indicating it was neither in the overbought nor oversold category.

Global financial services company HSBC has initiated coverage of Varun Beverages with a ‘Buy’ recommendation, setting a target price of Rs 780. The company controls a significant portion of PepsiCo’s bottling operations in India, claiming 90% of the bottling volume, and holds a 28% market share of the country’s carbonated soft drink sector.

In financial terms, Varun Beverages posted a revenue of Rs 7,197 crore for the April to June quarter, marking a 28% increase from the previous year’s corresponding period. The company’s net profit rose by 26% to Rs 1,252.6 crore from Rs 994 crore a year prior.

Varun Beverages Limited is a key franchise bottler for PepsiCo globally and markets a variety of beverages, including carbonated soft drinks and non-carbonated beverages such as packaged drinking water. The firm operates within a market that has traditionally seen less soft drink consumption compared to international counterparts.