Varun Beverages zooms 48% in 9-days post PepsiCo franchises deal

Varun Beverages moved higher by 17% to Rs 762 on the BSE in noon deal after a block deal executed on the counter. At 10:33 AM; around 900,273 equity shares representing 0.49% of total equity of the company changed hands on the BSE, the exchange data shows. The stock hit its highest level since listing on November 8, 2016.

VBL is one of the largest franchisees in the world (outside USA) of carbonated soft drinks (CSDs) and non-carbonated beverages (NCBs) for PepsiCo.

In past nine trading sessions, the stock has rallied 48% from Rs 516 on December 19, 2017 after the VBL signed an agreement with PepsiCo India's previously franchised sub-territory in Jharkhand.

“The board of directors on December 20, approved the company's intent to enter into a binding agreement to acquire PepsiCo India's previously franchised sub-territory in Jharkahand (20 districts) along with the manufacturing facilities and franchisee rights for Chhattisgarh. Upon completion of this acquisition, VBL will be a franchisee for PepsiCo products across 20 States and 2 Union Territories of India,” VBL said in a BSE filing.

According to Sharekhan, with the recent territory acquisitions in Jharkhand and Chhattisgarh, VBL would account for 49% of PepsiCo India’s domestic sales.

The territory acquisition would result in 2-3% increase in overall sales volume growth in CY2018 and CY2019, the brokerage firm said in stock update with positive view on the stock with 10-12% upside from price level of Rs 591 on December 27, 2017.

At 11:55 AM; the stock was trading 12% higher at Rs 725 on the BSE, against unchanged in the S&P BSE Sensex at 33,811 points. The counter has seen huge trading volumes with a combined 2.07 million shares changed hands on the BSE and NSE so far. An average sub one million shares were traded daily in past two weeks on the both exchanges.
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