India's Varun Beverages hits record high on S.Africa foray (updated)

Varun Beverages

20/12/2023 05:05

(Adds analyst comments in paragraph 5 and 6, details
throughout)
       BENGALURU, Dec 20 (Reuters) - Shares in Pepsi India
bottler Varun Beverages  VARB.NS  soared as much as 17.8% to a
record high on Wednesday, a day after the company said it would
buy South Africa's The Beverage Company in a deal valued at 13.2
billion rupees ($158.73 million).
    Varun Beverages, one of PepsiCo's  PEP.O  largest
franchisees outside the United States, is the top gainer on
Nifty FMCG Index  .NIFTYFMCG  and was last trading up 11.8% at
1,310 rupees. 
    The Nifty FMCG Index rose 1.3%.
    The Beverage Company makes and distributes PepsiCo-branded
and own-branded non-alcoholic beverages in South Africa.
    "We see significant value creation opportunity given
PepsiCo's low single-digit share in South Africa," said analysts
at Kotak Institutional Equities in a note.
    The analysts added that they expect the Gurugram-based
company to focus on PepsiCo's portfolio and gain share from
Coca-Cola and local South African brands.
    The deal is expected to be completed on or before July 31,
2024, the company said in a statement on Tuesday.
    The stock on Wednesday posted its biggest intra-day jump
since June 10, 2021 and is on track for an eighth consecutive
quarterly rise, if trend holds.
    Including the session's gains, stock has surged more than
88% this year so far, compared to a 25% gain in the Nifty FMCG
Index.
    Separately, Varun Beverages also inked a memorandum of
understanding with the Jharkhand government on Tuesday to set up
a manufacturing plant in the state, with a capital expenditure
of 4.5 billion rupees.


($1 = 83.1625 Indian rupees)

 (Reporting by Ashna Teresa Britto; Editing by Rashmi Aich)
 ((AshnaTeresa.Britto@thomsonreuters.com;))