Varun Beverages slides on profit selling

Varun Beverages fell 3.99% to Rs 1239.60 on profit booking after recent run up.

Shares of the beverage manufacturing company jumped 17.49% in the past four sessions to end at Rs 1,291.30 yesterday from its recent closing low of Rs 1,099 on 15 December 2023.

On the BSE, 2.01 lakh shares were traded in the counter so far compared with average daily volumes of 1.91 shares in the past two weeks.

Further, the stock hit a 52-week high of Rs 1,380.45 on 20 December 2023 intraday session. The stock hit a 52-week low of Rs 550.00 on 3 February 2023.

The stock had outperformed the market over the past one month, rising 20.13% compared with 7.69% rise in the Sensex.

The counter had outperformed the market in past three months, advancing 35.01% as against Sensex's 7.72% increase.

The scrip had outperformed the market in past one year, surging 79.79% as against Sensex's 16.90% jump.

On the technical front, the stock's daily RSI (relative strength index) stood at 70.731. The RSI oscillates between zero and 100. Traditionally, the RSI is considered overbought when above 70 and oversold when below 30.

On the daily chart, the stock was trading above its 50-day, 100-day and 200-day simple moving average (SMA) placed at 1025.20, 959.90 and 861.06, respectively. These levels will act as crucial support zones in near term.

Meanwhile, the company announced on 20 December that it is set to acquire 100% stake in South Africa-based The Beverage Company (BevCo) along with its wholly-owned subsidiaries for Rs 1,320 crore. The acquisition will enable Varun Beverages to expand its geographical footprint in Africa.

Bevco is engaged in the business of manufacturing and distribution of licensed (PepsiCo Inc.) / own-branded non-alcoholic beverages in South Africa. Bevco has franchise rights from PepsiCo Inc. in South Africa, Lesotho and Eswatini. Further, it also has distribution rights for Namibia and Botswana. BevCos net revenue for FY23 was about Rs 1,590 crore (ZAR 3,615 million).

Varun Beverages is engaged in manufacturing, selling, bottling and distribution of beverages of Pepsi brand in geographically pre-defined territories of India, Sri Lanka, Nepal, Zambia, Morocco and Zimbabwe as per franchisee agreement with PepsiCo India.

The company's consolidated net profit surged 31.5% to Rs 501.07 crore on 21.8% jump in net sales to Rs 3870.52 crore in Q2 FY24 over Q2 FY23.

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