Varun Beverages Share Price Jumps Over 4% on Stock Split
Indian beverage company Varun Beverages saw its share price surge over 4% on the Bombay Stock Exchange (BSE) following a 1:2 stock split. The company’s shares now have a face value of INR 5, down from INR 10, making them more accessible to small investors. On the first day of trading after the split, Varun Beverages’ shares rose by 4.31% to INR 862.90, although the gains were later tempered by profit-taking. As of now, the shares are trading at INR 830, up 2.82%.
Board Approval for Stock Split
The company’s board approved the stock split last month, with a record date of June 15, and the move has since increased the number of outstanding shares. Stock splits are a common practice in the equity market, and they typically lead to a lower share price, making them more affordable to smaller investors.
Varun Beverages’ Strong Performance
Varun Beverages is the world’s second-largest bottling company for Pepsi outside the United States. The company reported a consolidated profit of INR 429.07 crore in the March quarter, up 68.8% YoY. The increase in profits was attributable to top-line growth, margin improvement, and lower tax rates. According to Axis Securities, the company’s operational revenue rose by 37.7% YoY to INR 3,893 crore in the same period, thanks to its expansion plans and growing distribution network. The brokerage expects the company’s performance to continue to improve in the future.
Varun Beverages’ Share Price Performance
Varun Beverages’ shares have delivered strong returns to investors over the past year. The stock was trading at INR 358.33 (adjusted for the stock split) on June 20, 2022, and had risen by 144% in just 11 months to reach a record high of INR 873.58 (adjusted for the stock split) on May 26, 2023. However, the shares have since slipped by nearly 5% from their peak.
Conclusion
Varun Beverages’ stock split has made its shares more accessible to small investors. Despite the profit-taking seen after the initial surge in share prices, the company’s strong financial performance and expansion plans bode well for its future prospects.
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