FMCG stock jumps after acquiring 40% stake worth ₹200 Cr in bottling company

During Tuesday’s trading session, the shares of a key player in the beverage industry and PepsiCo’s bottling partner surged nearly 2 percent to Rs. 657 on BSE, after the company announced completing the acquisition of a 39.93 percent stake in the bottling company for Rs. 200 crores. 

With a market cap of Rs. 2.18 lakh crores, at 11:46 a.m., the shares of Varun Beverages Limited were trading in the green at Rs. 647.4, up by nearly 0.3 percent, as against its previous closing price of Rs. 645.6. 

What’s the news: 

Varun Beverages Limited (VBL), in its latest regulatory filings with the stock exchanges, announced the acquisition of 39.93 percent of the issued and paid-up equity share capital of Lunarmech Technologies Private Limited. 

Following this acquisition, Lunarmech has become a wholly-owned subsidiary of Varun Beverages Limited, effective 16th December. 

On 12th November, the company’s Board approved a Share Purchase Agreement to acquire the remaining 39.93 percent of the issued and paid-up equity share capital of Lunarmech for a total consideration of Rs. 200 crores. 

About the Target Entity: 

Lunarmech Technologies Private Limited is engaged in the business of manufacturing plastic closures for PET bottles and its production is being used by VBL in-house. 

As of FY24, Lunarmech reported a turnover of Rs. 183.4 crores. In comparison, its turnover was Rs. 230.2 crores in FY23 and Rs. 169 crores in FY22. 

Before this acquisition, Varun Beverages already held 60.07 percent of Lunarmech’s equity share capital. With this transaction of acquiring the remaining 39.93 percent stake, VBL now holds a 100 percent stake, making Lunarmech its wholly-owned subsidiary. 

Financials: 

Varun Beverages reported a significant growth in revenue from operations, experiencing a year-on-year rise of nearly 25.3 percent, increasing from Rs. 3,937.8 crores in Q3 CY23 to Rs. 4,932 crores in Q3 CY24.

Similarly, during the same period, the company’s net profit increased from Rs. 514 crores to Rs. 628.8 crores, representing a rise of around 22.3 percent YoY. 

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Key Developments for Q3 CY24: 

The company’s Board approved the proposal for fundraising by way of issuance of equity shares for an aggregate amount of up to Rs, 7,500 crores through QIP. 

VBL commenced production of carbonated soft drinks and packaged drinking water at our production facility in Kinshasa, Democratic Republic of Congo. The plant has two CSD/Water PET lines (swing) with an installed capacity of 550 BPM each. 

On 12th September, Varun Beverages sub-divided/split its existing equity shares from a face value of Rs. 5 each to Rs. 2 each. 

Stock Performance: 

The stock has delivered positive returns of nearly 42.2 percent in one year, while around 1 percent of negative returns in the last six months. So far in 2024, the shares of Varun Beverages have given positive returns of about 30 percent. 

About the company: 

Incorporated in 1995, Varun Beverages Limited is engaged in the business of manufacturing, selling, bottling and distributing beverages of the Pepsi brand in geographically pre-defined territories of India, Sri Lanka, Nepal, Zambia, Morocco and Zimbabwe as per franchisee agreements with PepsiCo India Holdings Private Limited and its affiliates. 

The company produces and distributes a wide range of carbonated soft drinks (CSDs), as well as a large selection of non-carbonated beverages (NCBs), including packaged drinking water sold under trademarks owned by PepsiCo. 

VBL is a key player in the global beverage industry and the second largest franchisee of PepsiCo in the world (outside US) with operations spanning across 10 countries with franchise rights and an additional 4 countries with distribution rights. 

Written by Shivani Singh 

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