Varun Beverages Tanks 6% After Q2 Results, Stock Split, Dividend Announcements; Know Why

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 year. 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.

The news which drove the stocks lower was that the company shares are set to become cheaper as the board has announced the sub-division. This is the second such corporate action (stock split) by the company in a little over one year.

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

Varun Beverages, the largest bottling company of PepsiCo’s beverages in the world outside the United States, made the announcement regarding the stock split in an exchange filing.

Varun Beverages Stock Split 2024 Record Date

According to an exchange filing by the company, the board at a meeting held today approved the sub-division/split of the existing equity shares, such that each equity share having face value of Rs 5 be split into such number of equity shares having face value of Rs 2 each fully paid-up.

The stock split is, however, subject to the approval of equity shareholders of the company, the filing added.

Varun Beverages didn’t announce the record date for determining the eligibility of shareholders participation in the upcoming stock split. The company said that record date will be announced in the due course.

“The Record Date for sub-division/split of existing Equity Shares shall be decided after taking aforesaid approval of the Equity Shareholders of the company,” the filing added.

Earlier on June 2023, Varun Beverages had split its the face value of equity shares in the ratio of 1:1, meaning each equity share of Rs 10 face value was split into two equity shares of Rs 5 each.

Varun Beverages Dividend 2024 Record Date

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 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.

Jaipuria said his company has commenced commercial production of carbonated soft drinks and packaged drinking water at our Greenfield facility in DRC. With the region representing an untapped market for PepsiCo, this expansion offers a huge growth opportunity for Varun Beverages, he said.