Varun Beverages shares gain as board okays Rs 7,500 crore QIP plan

Shares of Varun Beverages climbed in Wednesday's trade as the board of PepsiCo bottler, in a bid to execute growth plans and strengthen balance sheet, approved raising of funds via issuance of shares worth Rs 7,500 crore, in one or more tranches, through qualified institutions placement (QIP).

The money raised will be utilised for making investments in subsidiaries, joint ventures or associates by way of equity, preference capital, or debt, or to fund the growth of existing businesses including expanding product portfolio, entering into new territories and making strategic acquisitions. Besides, Varun Beverages intends to use the proceeds in pre-paying and/or repaying in full or in part of debts of the company or its subsidiaries.

Following the development, the stock rose 2.7 per cent to hit a high of Rs 605.85 on BSE. The stock is up 20 per cent in 2024 so far and 61 per cent in the past one year.

The fundraise will be subjected to receipt of approval of equity shareholders of the company through postal ballot and any other regulatory or statutory approvals.

For the September quarter, Nuvama Institutional Equities expects VBL's India volume growth is likely to come in at 8 per ent YoY on a normal base with high rains that are less conducive to cold beverages.

"We reckon international volume growth shall outstrip India volumes with BevCo doing well," the brokerage said.

The beverage market is currently expanding rapidly, creating many opportunities for new players to enter and contribute to its growth. Reliance, a formidable competitor, is likely to invest more in infrastructure to maintain its market position. However, the large size of the Indian market and the potential for accelerated growth due to increased investments suggest a positive and competitive environment where all players, including new entrants, can benefit.