Shares of Varun Beverages jumped 4 percent to Rs 1,588 per share on September 11 ahead of its record date for 2:5 stock split. This means that the stock will trade on an ex-split basis from tomorrow, September 12 onwards.
The board of directors has set September 12 as the 'record date,' which means this is the cutoff day to determine which shareholders are eligible for the company's stock split. In the split, each current share with a face value of Rs 5 will be divided into shares with a face value of Rs 2.
Earlier, in June 2023, Varun Beverages had already split its shares, reducing the face value from Rs 10 to Rs 5. This new split will further reduce the face value of each share.
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Typically, a company initiates a stock split to reduce the price per share, making it more affordable for smaller investors. However, this does not change the overall value of the company or an investor's holdings. By increasing the number of shares available at a lower price, a stock split can also boost trading volume and liquidity.
In the recently concluded June quarter, Varun Beverages grew 26 percent year-on-year (YoY) to Rs 1,262 crore, driven by volume growth and improved margins. The company's revenue rose 28.3 percent YoY to Rs 7,333 crore. At the operating level, its EBITDA increased by 31.8 percent YoY to Rs 1,991 crore and margins improved by 74 basis points YoY to 27.7 percent.
Analysts at Elara Securities reiterated an 'accumulate' rating and raised target price at Rs 1,780 per share from Rs 1,590 on 55x (unchanged) FY26E P/E as we roll forward to September 2026E. The key downside risk is lower-than-estimated volume growth.
So far this year, the stock of this beverage company surged 26 percent, beating Nifty 50's 15 percent surge.
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