 "Varun Beverages share rises 3% as board approves QIP of Rs 7,500 crore")
Varun Beverages shares gain: Shares of Varun Beverages were in demand on Wednesday, October 09, 2024, as the scrip soared up to 2.70 per cent to hit an intraday high of Rs 605.85 per share.
Varun Beverages share price gained after the company said that its board of directors have approved raising of funds by way of issuance of equity Shares for an aggregate amount not exceeding Rs 7,500 crore, in one or more tranche(s), through Qualified Institutions Placement (QIP).
QIP, or Qualified Institutional Placement, is a method for companies to raise capital by selling shares or other securities to qualified institutional buyers (QIBs).
In an exchange filing, the company said, “The Board of Directors of Varun Beverages Limited inter-alia considered and approved the raising of funds by way of issuance of Equity Shares for an aggregate amount not exceeding Rs. 7,500 crore (Rupees Seven Thousand Five Hundred Crore only), in one or more tranche(s), through Qualified Institutions Placement (QIP), subject to receipt of approval of Equity Shareholders of the Company through Postal Ballot and any other regulatory/ statutory approvals (if any).”
On September 30, HSBC initiated coverage on Varun Beverages with a ‘Buy’ rating and a target price of Rs 780 per share, according to reports. The brokerage’s optimistic outlook stems from the belief that Varun Beverages is set to become the largest and most transformative PepsiCo bottler in history.
Currently, Varun Beverages holds a 90 per cent share of PepsiCo's total bottling volumes in India, a market that remains relatively underpenetrated for soft drinks. Additionally, the company serves as the exclusive bottler for PepsiCo in Nepal, Sri Lanka, Morocco, Zambia, and Zimbabwe, making it the second-largest franchisee of PepsiCo outside the US.
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HSBC also highlighted the potential for disruptive digital market development driven by new AI tools and strategies, which could considerably accelerate Varun Beverages' growth. The brokerage noted that if the company can implement these technologies faster than its competitors, it could rapidly boost its market share.
Furthermore, HSBC anticipated a competitive landscape in India's bottling industry as AI continues to reshape the sector.
In July, the board announced a sub-division/split of existing equity shares of the Company from 1 (one) equity share having face value of Rs 5 each, fully paid-up, into such number of equity shares having face value of Rs 2 each fully paid-up.
At 12:55 PM, VBL shares were trading 0.96 per cent higher at Rs 595.55 per share. In comparison, BSE Semsex was trading 0.48 per cent higher at 82,024.01 levels.