Surat Wealth Management：Varun Beverages shares plunge 6% post Q2 results, stock split, dividend announcements

Shares of Varun Beverages Ltd plunged 6 per cent in Tuesday’s trade even as the PepsiCo bottler said its profit after tax rose 25.5 per cent to Rs 1,261.83 crore for the June quarter compared with Rs 1,005.42 crore in the same quarter last yearSurat Wealth Management. The profit growth was driven by volume growth and improved margins, Varun Beverages said.

The largest franchisee of PepsiCo in the world, outside the US, said its revenue from operations grew 28.3 per cent YoY to Rs 7,196.86 crore in Q2 compared with Rs 5,611.40 crore in the year-ago quarter. The bottler of PepsiCo, which follows calendar as financial year, was expected to report 25-43 per cent year-on-year (YoY) rise in net profit for the quarter on up to 25-35 per cent jump in sales.

Following the development, the stock fell 6.4 per cent to hit a low of Rs 1,575.95 on BSE.

Varun Beverages stock split

The Varun Beverages board announced sub division of existing shares of the company, such that each equity share having face value of Rs 5 each fully paid-up, be split into such number of equity shares having face value of Rs 2 each, fully paid-up, subject to the approval of Equity shareholders of the company through postal ballotAhmedabad Stock. This is intended for wider retail participation, said Ravi Jaipuria, Chairman at Varun Beverages.

Varun Beverages said the record date for split of existing shares would be decided after taking aforesaid approval of the equity shareholders of the company.

Varun Beverages interim dividend

Varun Beverages also announced the payment of interim dividend of Rs 1.25 per share on the total issued, subscribed and paid-up 129,94,48,412 shares of the nominal value of Rs 5 each. The interim dividend will be paid on and from Tuesday, August 13, 2024 to those shareholders whose name appears in the register of members of the company or in the list of beneficial owners maintained by the depositories as on Friday, August 9, 2024. The total cash outflow would be Rs 162.43 crore, Varun Beverages said.

Varun Beverages Q2 volumes

The consolidated sales volume grew 28.1 per cent to 40.16 crore cases in Q2 CY2024 from 31.35 crore million cases in Q2 CY2023Agra Investment. “This includes 28 million cases from BevCo during the quarter. India volumes grew 22.9 per cent while International volumes (before BevCo volumes) was almost flat primarily on account of volumes in Zimbabwe getting affected due to portfolio transition to zero sugar without affecting profits,” Varun Beverages said.

Varun Beverages management commentary

“With strong performance in a key quarter, we are on track to deliver healthy double-digit growth in this calendar year. India remains a high-demand market with massive growth potential, driven by a growing consuming class and a young population. To capitalize on this demand, we are focused on further strengthening our infrastructure, distribution network, and product portfolio. With a focus on strategic growth and leveraging new opportunities in both India and international markets, we are confident in our ability to deliver sustainable value to all stakeholders,” Jaipuria said.

Jaipuria said his company has further expanded its partnership with PepsiCo, having entered into an Exclusive Snacks Franchising Appointment to manufacture, distribute, and sell “Simba Munchiez” in Zimbabwe by October 2025 and in Zambia by April 2026. This follows our recent announcement to manufacture and package Cheetos in Morocco by May 2025. These agreements complement the existing distribution of PepsiCo’s portfolio.

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