Shares of Varun Beverages rose by 4% to Rs 1,588 per share on September 11, in anticipation of its record date for a 2:5 stock split. Starting September 12, the stock will trade on an ex-split basis.
Details of the Stock Split
The board of directors has set September 12 as the ‘record date,’ marking the cutoff to determine which shareholders are eligible for the stock split.
The split will reduce the face value of each share from Rs 5 to Rs 2, furthering the reduction initiated in June 2023 when the company previously split its shares from Rs 10 to Rs 5.
Purpose and Impact of the Stock Split
A stock split typically aims to lower the price per share, making it more accessible to smaller investors, while not altering the overall value of the company or an investor’s total holdings. It can also increase trading volume and liquidity by expanding the number of shares available at a lower price.
Quarterly Financial Performance
For the June quarter, Varun Beverages reported a 26% year-on-year (YoY) increase in net profit to Rs 1,262 crore, driven by volume growth and improved margins. Revenue rose by 28.3% YoY to Rs 7,333 crore, and EBITDA climbed 31.8% YoY to Rs 1,991 crore, with margins improving by 74 basis points YoY to 27.7%.
Elara Securities on Varun Beverages
Elara Securities has reiterated an ‘accumulate’ rating on the stock, raising its target price to Rs 1,780 per share from Rs 1,590, based on a 55x FY26E P/E multiple. The key downside risk is lower-than-estimated volume growth.