Varun Beverages Sets Floor Price for Rs.7,500 Crore QIP

Varun Beverages, PepsiCo’s leading bottling partner, has announced the launch of its Qualified Institutional Placement (QIP), targeting a fundraising of up to Rs.7,500 crore. The issue opened on November 13, 2024, with a floor price of Rs.594.56 per share, representing a 4.66% premium to the previous NSE closing price of Rs.568.10.

QIP Details & Equity Dilution

The QIP’s base size is Rs.5,500 crore, with an additional green shoe option of Rs.2,000 crore. Indicative pricing is set at Rs.565 per share, a 0.55% discount to the last closing price and around 5% below the SEBI floor price. The issuance involves 13.27 crore shares, including 3.5 crore under the green shoe option, resulting in an estimated equity dilution of 4.1%.

Utilization Plans & Financials

Proceeds from the QIP will support Varun Beverages’ growth strategy, including investments in subsidiaries, joint ventures, and associates. The funds will also be used for expanding the product portfolio, entering new markets, and pre-paying or repaying debt.

For the third quarter ending September 2024, Varun Beverages reported a net profit of Rs.619.6 crore, up 23.6% from Rs.501 crore a year ago. Revenue rose by 24% YoY to Rs.4,805 crore, driven by an expanded distribution network and favourable demand trends. The company’s EBITDA grew 30% YoY to Rs.1,151 crore, with margins improving to 24% from 22.8%.

Recent Developments

Varun Beverages recently acquired two African companies, SBC Tanzania and SBC Beverages Ghana, for Rs.1,304 crore and Rs.127.1 crore, respectively with the goal of expanding into new territories.

Conclusion: The QIP launch will help Varun Beverages strengthen its balance sheet and fund growth plans. With consistent financial performance and strategic acquisitions, the company is doing well in the global beverage bottling space. The shares of Varun Beverages are trading at Rs.575.85, up 1.36% today.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.