Varun Beverages fixes record date for stock split; shares fall after two sessions

Shares of FMCG major Varun Beverages Ltd are in focus today after the firm fixed June 15, 2023 as the ‘Record Date’ for determining entitlement of equity shareholders for the purpose of sub-division / split of existing equity shares. On May 2, board of Varun Beverages decided to split its shares in the proportion of 1:2. For every existing share an investor holds, two additional shares will be issued by the company. 

Varun Beverages stock gained 2.06% intraday to Rs 1740.65 against the previous close of Rs 1705.55 on BSE. In a year, the stock has zoomed 130% and gained 28% in 2023. Market cap of the firm stood at Rs 1.09 lakh crore. A total of 0.52 lakh shares of the firm changed hands, amounting to a turnover of Rs 8.76 crore on BSE. Later, the stock ended 1.10% lower at Rs 1686.75  on BSE. The stock has fallen after two sessions of gain.  

In terms of technicals, the relative strength index (RSI) of Varun Beverages stands at 68.6, signaling the stock is neither oversold nor oversold. The stock has a one-year beta of 0.8, indicating low volatility during the period. Varun Beverages shares are trading higher than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages.   

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Varun Beverages, a franchisee of PepsiCo, said that the split was being done to enhance the liquidity of the company's shares and to encourage the participation of small investors.  

The stock split is likely to be completed in two months from the date of approval of the company's shareholders. Record date for the stock split will be determined once approval of shareholders is obtained.  

Varun Beverages reported strong earnings for the quarter ended March 2023. The company follows the January-December format to report earnings. Net profit in Q1 climbed 69 percent year-on-year to Rs 429 crore. Operating profit or EBITDA climbed 50 percent to Rs 798.1 crore.  

EBITDA margin in the March quarter rose 170 basis points year-on-year to 20.5 percent. 

Revenue rose 38 percent to Rs 3,893 crore on a year in year basis. Revenue growth was led by robust volume growth and an increase in net realisations. Sales volumes climbed 24.7 percent to 224.1 million cases, led by strong demand across India. Realisations in Q1 climbed 10.4 percent year-on-year to Rs 173.7 per case due to price hikes and improvement in energy drink mix of smaller SKUs.  

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