Varun Beverages trades ex-date for 1:1 stock split, soars 7% in muted mkt

VBL said stock split will enhance liquidity of the company's equity shares and encourage participation of small investors by making equity shares of the company more attractive to invest

Shares of Varun Beverages soared 7 per cent to Rs 862.90 on the BSE in Thursday's intra-day trade after the stock turned ex-date for split in the ratio of 1:1.

The board of directors of the company had fixed Thursday, June 15, 2023 as the 'Record Date' for determining entitlement of equity shareholders for the purpose of sub-division/split of existing equity shares of the company from one equity share, having face value of Rs 10 each, into 2 equity shares, having face value of Rs 5  each. The company had approved stock split through Postal Ballot on June 2, 2023.

Varun Beverages said it intends to enhance liquidity of the Company's equity shares and encourage participation of small investors by making equity shares of the Company more attractive to invest.

A stock split is a corporate action in which a company issues additional shares to shareholders, increasing the total shares by the specified ratio based on the shares they held previously. Companies often choose to split their stock to lower its trading price to a more comfortable range for most investors and to increase the liquidity of trading in its shares.

In the past one year, the stock price of Varun Beverages has zoomed 119 per cent, as compared to 20 per cent rise in the S&P BSE Sensex. The stock had hit a record high of Rs 873.58 (adjusted to split, bonus) on May 26, 2023.

At 10:57 am, Varun Beverages was quoting 3 per cent higher at Rs 831.70, as against 0.03 per cent gain in the benchmark index. Average trading volumes on the counter nearly doubled post split. A combined 1.94 million shares had changed hands on the NSE and BSE till the time of writing of this report.

Varun Beverages produces & distributes carbonated drinks, juices & packaged drinking water in six countries including India. Some of the PepsiCo brands produced by VBL include Pepsi, Diet Pepsi, Seven-Up, Mirinda, Mountain Dew, Nimbooz, String, Slice, Tropicana, Aquafina among others.

The company had reported revenue growth of 38 per cent in the March quarter (Q1CY23), driven by robust volume growth and an increase in net realization. Profit after tax (PAT) increased by 61.8 per cent year-on-year (YoY) to Rs 439 crore from Rs 271 crore in Q1CY22 driven by high growth in revenue from operations, improvement in margins, and transition to a lower tax rate in India.