Jubilant FoodWorks drops 4% as parent buys 40% stake in Coca Cola's bottler

Shares of Jubilant FoodWorks dropped up to 4.1 per cent on the BSE in the early hours of trading on Thursday

Shares of Jubilant FoodWorks dropped up to 4.1 per cent  at Rs 710.85 on the BSE in the early hours of trading on Thursday after the company's parent firm, the Jubilant Bhartia Group signed an agreement to buy out 40 per cent of Coca-Cola’s Indian bottling unit Hindustan CocaCola Beverages (HCCB). According to reports, the deal is pegged at around Rs 12,500 crore, valuing HCCB at Rs 31,250 crore.

 

HCCB operates 13 factories, serving 236 districts across 12 states in India's south and west.

 

In a statement on Wednesday, Shyam S. Bhartia, founder and chairman, and Hari S. Bhartia, founder and co-chairman of the Jubilant Bhartia Group, emphasized that the recent acquisition highlights the group's confidence in the long-term growth potential of India's food and beverage industry.

 

 

Both companies see several synergies and benefits between HCCB and existing businesses of Jubilant Bhartia Group, like Domino’s Pizza and other food chains.

 

However, the foray has put the company in competition with the Jaipuria family again, which is the bottler for PepsiCo, housed under Varun Beverages. 

 

Jubilant FoodWorks share price history

 

On the equities side, Jubilant FoodWorks’s stock has outperformed the market in the last six months as it has risen 27 per cent, while gaining 22 per cent in the last one year. In comparison BSE Sensex has risen 6 per cent year to date and 17 per cent in a year. 

 

The company has a total market capitalization of Rs 45,027.84 crore. Its shares are trading at a price to earnings multiple of 236 times and at an earning per share of Rs 2.88. 

 

At 10:49 AM; the shares of the company were trading 3.70 per cent lower at Rs 682.40 a piece. By comparison, the BSE Sensex was down 0.05 per cent at 81,484.22 level. 

 

The Jubilant Bhartia Group, originally founded as a drugs and chemicals company, has expanded into various sectors including contract research and development services, agricultural products, performance polymers, and food services. Jubilant FoodWorks Ltd, a subsidiary of the group, is India's largest food services company and holds exclusive rights to develop and operate Domino's Pizza in India, Sri Lanka, Bangladesh, and Nepal.