Varun Beverages
Varun Beverages shares jump as board approves raising up to Rs 7,500 crore via QIP
Mumbai/IBNS: Shares of Varun Beverages surged in Wednesday's (Oct. 9) trading session after the board of the PepsiCo bottler approved a plan to raise Rs 7,500 crore through qualified institutional placement (QIP) to support its growth initiatives and enhance its balance sheet.
The company intends to raise the funds in one or more tranches.
The capital raised will be directed toward investments in subsidiaries, joint ventures, or associates, through equity, preference shares, or debt.
Additionally, the funds will be used to support the company's growth by expanding its product portfolio, exploring new markets, and making strategic acquisitions.
Varun Beverages also plans to allocate a portion of the proceeds to prepay or repay part of its debt, as well as that of its subsidiaries.
In an exchange filing, the company stated, "Notice of Postal Ballot for seeking approval of Equity Shareholders in respect of raising of funds by way of issuance of Equity Shares through QIP."
Following this announcement, Varun Beverages' stock saw a 2.7 percent increase, reaching a high of Rs 605.85 on the BSE.
So far in 2024, the stock has risen by nearly 20 percent and has seen a staggering 395.34 percent increase over the past three years, according to data from the BSE.
In September 2024, Varun Beverages had also announced a stock split in the ratio of 5:2, reducing the face value of each share from Rs 5 to Rs 2.
The fundraise will be contingent on approval from the company's equity shareholders via a postal ballot, along with any other necessary regulatory or statutory clearances, according to reports.
As the beverage industry continues to grow rapidly, new opportunities are emerging for companies to capitalize on market expansion.
While Reliance remains a significant competitor with expected investments in infrastructure, the vast size of the Indian market and the potential for accelerated growth through increased investment present a favourable environment for both established players and new entrants to thrive.
Varun Beverages Ltd. (VBL), one of the largest franchise bottlers for PepsiCo worldwide, reported a revenue of Rs 7,197 crore in the April to June quarter of 2024, representing a 28 percent year-on-year (YoY) growth.
The company, which operates on a January-December fiscal year, also saw a 26 percent rise in net profit for the quarter, reaching Rs 1,252.6 crore compared to Rs 994 crore in the same period last year.
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