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Varun Beverages launches ₹5,500 crore Qualified Institutional Placement with a floor price of ₹594.56 per share. The move may dilute equity by 4.1%, with earnings and margins seeing significant growth.
Varun Beverages Ltd, a prominent bottler for PepsiCo, launched its Qualified Institutional Placement (QIP) today. The base deal size for the QIP is ₹5,500 crore, with an option to upsize by ₹2,000 crore, potentially bringing the total to ₹7,500 crore. The SEBI-mandated floor price has been set at ₹594.56 per share, while the indicative price is ₹565, reflecting a slight discount. The equity dilution for this issuance is expected to be around 4.1%.
Base QIP Size: ₹5,500 crore, expandable to ₹7,500 crore.
SEBI Floor Price: ₹594.56 per share.
Indicative Price: ₹565 per share.
Equity Dilution: Approximately 4.1%.
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Varun Beverages’ robust Q3 FY24 financial performance aligns with the timing of the QIP. The company posted a net profit of ₹619.6 crore, marking a 23.6% year-on-year increase. Revenue surged by 24% to ₹4,805 crore, driven by expanded distribution and increased demand in key markets. EBITDA rose by 30% to ₹1,151 crore, with margins improving from 22.8% to 24%.
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Metrics | Q3 FY24 | Q3 FY23 | YoY Growth |
Net Profit (₹ crore) | 619.6 | 501.0 | 23.6% |
Revenue (₹ crore) | 4,805 | 3,874 | 24% |
EBITDA (₹ crore) | 1,151 | 886 | 30% |
EBITDA Margin (%) | 24% | 22.8% | +100 bps |
Gross Margin (%) | 55.5% | 55.3% | +22 bps |
The QIP launch is expected to impact Varun Beverages share price in the short term due to equity dilution. However, the company's strong financial performance and expanding market presence could sustain long-term investor confidence. The discounted indicative price may attract significant institutional participation.
The QIP reflects Varun Beverages’ strategic approach to scaling operations while leveraging its improved earnings performance. Investors will closely monitor the outcome of this fundraising initiative and its implications for Varun Beverages share price in the coming quarters.
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This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.
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