Varun Beverages surges 11% in 2 days after stock turn ex-date for 1:2 bonus

Shares of Varun Beverages (VBL) hit an all-time high of Rs 667 apiece, up 8 per cent intra-day, on the BSE on Friday. The stock has surged 11 per cent in the past two trading days on the exchange after it turned ex-date for bonus issue in the ratio of 1:2 on Thursday. In comparison, the S&P BSE Sensex was up 0.20 per cent in past two days.

The stock of the beverages manufacturer surpassed its previous high of Rs 650 (adjusted to bonus) hit on July 9, in the intra-day trade.

The board of directors of VBL had fixed Saturday, July 27, 2019 as the record date for the purpose of ascertaining the eligibility of shareholders entitled for issuance of bonus equity shares of the company in the proportion of 1 equity shares for every 2 shares held.

The board is scheduled to meet on Thursday, August 1, 2019, to consider the financial results of the company for the period ended June 30, 2019 (Q1FY20) and to consider declaration of interim dividend.

JM Financial Institutional Securities expects VBL to post 38 per cent year on year (YoY) growth in net profit at Rs 583 crore, and a 39 per cent YoY jump in the sales at Rs 4,865 crore in Q1FY20.

“Domestic organic volume growth is expected in double-digit. Overall volume growth is likely to be aided by higher growth in international plus acquisition of South and West regions,” the brokerage firm said in its quarter result preview.

Analysts at ICICI Securities remain positive on VBL on the back of continuous expansion to newer territories to expand its base in untapped geographies. 

"It remains a proxy play on the soft drink industry in India. As volume growth picks up in new territories and the company participates in the manufacturing segment of Tropicana, the EBITDA margin is expected to improve to 18.7 per cent in CY21E," the brokerage firm had said post March quarter earnings.

Varun Beverages produces and distributes a wide range of carbonated soft drinks (CSDs) as well as a large selection of non-carbonated beverages (NCBs) including packaged drinking water. PepsiCo CSD brands produced and sold by the company include Pepsi Diet Pepsi Seven-Up Mirinda Orange Mirinda Lemon Mountain Dew Seven-Up Nimbooz Masala Soda Evervess Soda Sting and Gatorade.