Varun Beverages briefly breaches Britannia market cap to become 4th largest FMCG firm; stock hits new high

Varun Beverages – a bottling and beverage distribution company – briefly surpassed the market capitalisation of Britannia Industries (Rs 1.11 lakh crore) during Friday’s session to become the fourth largest listed FMCG firm as its share price jumped around 7.5 per cent during the mid-session today.

However, the market capitalisation of Pepsi and Sting soft drinks distributor in India came neck and neck at around Rs 1.11 lakh crore as the stock pared the early gains to trade at Rs 1,696.25 per share, up Rs 71.70 or 4.41 per cent later from the previous day’s closing price of Rs 1,624.55 apiece.

Varun Beverages' stock on Friday also touched a lifetime high of Rs 1747.15 per share on the BSE today, its 52-week low price is Rs 697.25 apiece hit on May 31, 2022. The counter has jumped nearly 24 per cent since the company announced its robust FY23 March quarter earnings on May 2, 2023.

March quarter results

Varun Beverages’ profit after tax (PAT) for the March quarter increased by 61.8 per cent year-on-year (YoY) to Rs 438.6 crore, while revenue grew by 37.7 per cent YoY in the quarter ending March 31 to Rs. 38,92.98 crore driven by robust volume growth and an increase in net realisation.

The sales volume of Varun Beverages for the quarter grew by 24.7 per cent to 224.1 million cases, led by strong demand across India and the EBITDA margin was up 170 basis points YoY to 20.5 per cent.

Brokerages’ view

Domestic brokerage firm Motilal Oswal expects Varun Beverages to maintain its earnings momentum, underpinned by:

• Increased penetration in newly acquired territories of South and West India,
• Higher acceptance of newly launched products
• Constantly adding new capacities and expanding distribution reach
• Growing refrigeration in rural and semi-rural areas.

With Sting reasonably established and penetrated, incremental volume surge will have to be driven by new categories, another brokerage Nuvama Institutional Equities said, and further added that Campa Cola’s scale-up is a key monitorable, but any impact, if at all, will be visible next year.

Varun Beverages' share price history

Varun Beverages shares have given multibagger returns in the last one year as the stock jumped more than 138 per cent in the said period as compared to a 14 per cent rise in the Nifty50.

Year-to-date, the counter gained almost 28 per cent against an over 1 per cent rise in the Nifty index.

Varun Beverages Outlook and Growth

In India, Varun Beverages has a presence in 27 states and 7 union territories and it is constantly expanding its reach and capacity. The company had tied up with Pepsico to manufacture "Kurkure Puffcorn" in India last year.

The company was also included in MSCI and FTSE Global Index. On May 23, the company formed a subsidiary for the manufacture and sale of beverages in South Africa.