InvestorQ : Why did the stock of Varun Beverages rally so sharply in the last few days?
vaishnavi mhatre made post

Why did the stock of Varun Beverages rally so sharply in the last few days?

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vidhya Laxmi answered.
3 weeks ago
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Bottling player, Varun Beverages, just scaled a new high of Rs.1,153 as the stock spiked by 9% on Friday. This was after the board of Varun Beverages recommended bonus shares in the proportion of 1:2 i.e. 1 equity share for 2 equity shares held. IN addition, the quarterly numbers were also very strong. For instance, for the Mar-22 quarter, the sales grew 26.2%, largely supported by 19% volumes growth in this period.

Volume growth for Varun Beverages is normal with the early onset of summer in India, which leads to a high demand for beverages. Varun had to put up with spike in input costs, but despite that the EBITDA margins improved by 175 bps to 18.8% in the quarter. PAT for the quarter was up 98% yoy at Rs.271 crore. There was a lowering of finance costs leading to better net profit margins.

On the demand front, Varun is seeing a strong uptick in consumption. The strong recovery is likely to continue going forward and is expected to be led by out-of-home consumption, which is a fast growing segment. Also, improved refrigeration in rural and semi urban areas has helped a good deal. The company has also raised its full year earnings guidance by 7%.

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