Varun Beverages Stock Price Set to Skyrocket – Analysis!

Pavan 20th Dec 2023

Varun Beverages Limited announced its acquisition of South Africa-based The Beverage Company and its subsidiaries, Bevco, in a significant deal valued at Rs 1,320 crore, as per a BSE filing on Tuesday. The stock’s historical price, analysis, and prediction are covered here. So do read the full post to get a better understanding.

Varun Beverages Limited recent news

The press release highlighted Bevco’s core involvement in manufacturing and distributing licensed (PepsiCo Inc.) and own-branded non-alcoholic beverages in South Africa. Notably, it holds franchise rights from PepsiCo Inc. in South Africa, Lesotho, and Eswatini, along with distribution rights for Namibia and Botswana.

This acquisition marks a pivotal move for Varun Beverages, known for its production and distribution of non-alcoholic beverages, as it seeks to expand its footprint across Africa. The completion of this acquisition is anticipated on or before July 31, 2024, according to the press release.

Varun Beverages revealed its intention to hold 100 per cent of the equity share capital of Bevco and its subsidiaries, allowing for the possibility of accepting minority co-investment from prominent equity funds.

Among Bevco’s subsidiaries, Little Green Beverages Proprietary Limited operates as an active company, while several other dormant companies fall under its umbrella, including

• The Beverage Company BIDCO Proprietary Limited.
• Old Little Green Beverages Proprietary Limited.
• Little Green Beverages Bloemfontein Proprietary Limited.

In recent accolades, Varun Beverages was recognised as the top performer in the fast-moving consumer goods (FMCG) space over the past year, achieving an impressive 60 per cent return. The company’s revenue growth was attributed to a 15.4 per cent year-on-year (Y-o-Y) volume growth, reaching 220 million cases, coupled with a 5 per cent increase in realisations to Rs 176 per case.

Looking ahead, Varun Beverages has outlined plans to establish three greenfield plants in Uttar Pradesh, Maharashtra, and Odisha in CY24. These units aim to commence operations in time to meet the demand for the peak summer season of 2024.

Key Points:

• Varun Beverages Limited acquires The Beverage Company and its subsidiaries, Bevco, in a Rs 1,320 crore deal.
• Bevco specializes in manufacturing and distributing licensed and own-branded non-alcoholic beverages in South Africa.
• The acquisition enables Varun Beverages to expand its presence across Africa.
• Completion of the acquisition is expected on or before July 31, 2024.
• It also plans to hold 100 Percent equity share capital of Bevco and its subsidiaries.
• The company is also recognised as the top performer in the FMCG sector with a 60 per cent return.
• Future plans include setting up three greenfield plants in Uttar Pradesh, Maharashtra, and Odisha by CY24 to meet summer demand in 2024.

Some Pros and Cons of Varun Beverages Ltd.

• Good Profit growth of 49.2 Percent CAGR over last 5 Years
• Good Dividend Payout of 17.6 per cent
• Sales growth is 18.3% which is the median of the last 10 Years
• Stock is trading at 23.5 times its book value with P/E Ratio of 76.2+
• Promoters booked profit – i.e Decreased holding by 0.52 per cent over last quarter
• The FMCG sector’s – Food Processing unit’s median P/E is 36.76

Following are some fundamental and Technical statistics for Indian Food Processing Companies.

Some Questions and answers on Varun Beverages Stock Price are covered below

1. When Varun Beverages Ltd was listed?
   • Stock was Listed on 11th November 2016 with promoters and public holding of 73.59 & 26.41 per cent respectively.
2. When was the 1st time promoters diluted their stake or Stock Holdings?
   • On 09th September 2019 promoters reduced their holding from 73.56 per cent to 69.81 per cent and public holding stands at 30.19 per cent.
3. What does current shareholding look like?
   • Currently, promoters hold about 63.1 per cent and public holdings stand at 36.9 per cent.
4. What does Varun Beverages’ future growth of stock and stock price look like?
   • Promoter’s holding is still great and we believe that they hold a good portion in the stock, recent developments and corporation actions suggest there is roadmap potential for the company and its investors.
   • Till October 2020 stock prices were around Rs.150 ie ranging from Rs.70 to Rs.160
   • From November 2020 onwards bull run started and its stock price went from Rs.160 to Rs.303 by September 2021 that’s almost a 100 per cent return in 1 Year.
   • Varun Beverages’ stock price didn’t stop there at all, after some consolidation for 7 months till April 2022, the stock price started another bull run and from Rs.300 levels it went up to Rs.630 by January 2023.
   • This year in 2023, it again became a multi-bagger by rising all the way to the levels of Rs.1171 (an all-time high on 20th December 2023) to Rs.1380 Mark in a very short period of time.
   • The future of the stock looks good and here we update all the necessary information about Varun Beverages Stocks in the coming days so be updated and read One Way Choice articles.
5. Which cold drink beverage brand does Varun Beverages manufacture?
   • It’s a non-alcoholic beverage manufacturing brand and the public likes its products like Pepsi, Mirinda, Mountain Dew, STING, 7up, Slice, Tropicana and more.

More details on stock prices, trends and predictions will be updated in future times so save this post.

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