Pepsico franchise Varun Beverages shares rise by 17%, hit 52-week high

Varun Beverages is one of PepsiCo's largest franchisees outside the US, and is a top gainer on Nifty FMCG Index and was last trading up 11.8% at ₹1,310.

Updated on: Dec 20, 2023, 14:41:29 IST

By HT News Desk | Written by Aryan Prakash

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Shares of Pepsi India bottling company Varun Beverages surged by 17 per cent to an all-time high of ₹1,380.45 on Wednesday, this a day after the company announced its decision to buy South Africa's The Beverage Company in a deal valued at 13.2 billion rupees ($158.73 million).

Earlier in the day, the shares of Varun Beverages had opened at ₹1,350, more than the previous close of ₹1,172 on Tuesday.

The Varun Beverages shares on Wednesday posted its biggest intra-day jump since June 10, 2021 and is on track for an eighth consecutive quarterly rise (AP)

The company is one of PepsiCo's largest franchisees outside the US, and is a top gainer on Nifty FMCG Index and was last trading up 11.8% at ₹1,310.

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The Beverage Company makes and distributes PepsiCo-branded and own-branded non-alcoholic beverages in South Africa.

"We see significant value creation opportunity given PepsiCo's low single-digit share in South Africa," analysts at Kotak Institutional Equities told Reuters.

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They expect Varun Beverages to focus on PepsiCo's portfolio and gain share from Coca-Cola and local South African brands. The deal is expected to be completed on or before July 31, 2024, the company had said in a statement on Tuesday.

The Varun Beverages shares on Wednesday posted its biggest intra-day jump since June 10, 2021 and is on track for an eighth consecutive quarterly rise, if trend holds. Including the session's gains, the shares have surged more than 88% this year so far, compared to a 25% gain in the Nifty FMCG Index.

Varun Beverages also inked a memorandum of understanding with the Jharkhand government on Tuesday to set up a manufacturing plant in the state, with a capital expenditure of 4.5 billion rupees.

(With Reuters inputs)

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