Varun Beverages is one of the largest franchisees in the world of carbonated soft drinks and non-carbonated beverages sold under trademarks owned by PepsiCo. The company produces and distributes a wide range of beverages under the Pepsi, Diet Pepsi, Seven-Up, Mirinda Orange, Mirinda Lemon, Mountain Dew, Seven-Up Nimbooz Masala Soda, Seven-Up Revive, Evervess, Tropicana Slice, Tropicana Frutz (Lychee, Apple and Mango), Nimbooz, and Aquafina brands.
Thanks to Varun Beverages’ nearly 26 years of relationship with PepsiCo, it has also been granted the franchise for various PepsiCo products in Sri Lanka, Morocco, Mozambique and Zambia. In addition, it is setting up a greenfield facility in Zimbabwe in anticipation of franchise rights by PepsiCo.
India continues to remain the largest market for Varun Beverages, contributing 84.38% of its revenues from operations in FY2015.
As of April 30, 2016, Varun Beverages operated 16 production facilities across India and five production facilities in international licensed territories. Its distribution network in India included 57 depots and 1,389 delivery vehicles while it operates 6 depots and 342 delivery vehicles in international markets. As of December 2015, Varun Beverages had 578 primary distributors (which had FY2015 sales in excess of 0.5 million litres of PepsiCo beverages) in India and 244 distributors in international operations. The 578 primary distributors in India accounted for 76.79% of its aggregate sales volumes in India in FY2015.
Promoter of Varun Beverages: RJ Corp Limited, Ravi Kant Jaipuria, Varun Jaipuria and Ravi Kant Jaipuria & Sons (HUF)
| Varun Beverages IPO details | |
| Subscription Dates | 26 – 28 October 2016 |
| Price Band | INR440 – 445 per share |
| Fresh issue | 15,000,000 shares |
| Offer For Sale | 10,000,000 shares |
| Total IPO size | 25,000,000 shares (INR1,112.5 crore at upper band) |
| Minimum bid (lot size) | 33 shares |
| Face Value | INR10 per share |
| Retail Allocation | 35% |
| Listing On | BSE, NSE |
|
Varun Beverages’ consolidated financial performance (in INR crore) |
|||||
| FY2012 | FY2013 | FY2014 | FY2015 | H1 FY2016 | |
| Total revenue | 1,844.1 | 2,132.5 | 2,517.1 | 3,408.4 | 2,539.3 |
| Total expenses | 1,823.3 | 2,178.1 | 2,513.3 | 3,246.2 | 2,226.2 |
| Profit after tax | 25.1 | -39.5 | -20.1 | 87.0 | 209.7 |
Varun Beverages Ltd
Plot No. 31, Institutional Area,
Sector 44, Gurgaon 122002
Phone: +91 124 464 3100
Fax: +91 124 464 3303
Email: [email protected]
Website: www.varunpepsi.com
Karvy Computershare Private Limited
Karvy House, 46, Avenue 4, Street No. 1,
Banjara Hills, Hyderabad – 500 034
Andhra Pradesh, India
Phone: +91 40 23312454
Fax: +91 40 23311968
Email: [email protected]
Website: http://karisma.karvy.com
Varun Beverages IPO Subscription Details
| Category | Shares offered | Subscription (no. of times, at 6 PM) | ||
| Day 1 | Day 2 | Day 3 | ||
| QIB |
4,900,000 |
0.87 |
2.94 | 4.93 |
| NII |
3,675,000 |
0.18 |
0.21 | 0.41 |
| Retail |
8,575,000 |
0.11 |
0.31 | 0.81 |
| Employee |
500,000 |
0.00 |
0.02 | 0.05 |
| Total |
17,650,000 |
0.33 |
1.01 | 1.85 |
Varun Beverages IPO allotment status will be available on available on Karvy Computershare’s website. Click on this link to get allotment status. You can also check allotment status using application number on this link.
IPO Opening Date: 26 October 2016
IPO Closing Date: 28 October 2016
Finalisation of Basis of Allotment: 3 November 2016
Initiation of refunds: 4 November 2016
Transfer of shares to demat accounts: 7 November 2016
Listing Date: 8 November 2016
Listing Price on NSE: INR430 per share (Loss of 3.3% on IPO price)
Closing Price on NSE: INR456.8 per share (Profit of 2.6% on IPO price)
Biggest bottler and loss in two years??? Not even even worthy of any premium in grey market. Just my opinion, no need to get offend anyone
Doesn’t look good. Such a big name and v poor results. I’m not going for it although applications trading at 35-40 gmp.
And don’t fall in the trap in Varun beverages. No or very little grey market trading in Varun. IPO price around 600, Flop IPO, STAY AWAY.
Why do you say it flop ipo without knowing price. ARe you sure the price will be 600??? It will be good just like manpasand ipo. Peopl called that also expecensive and just look at the price now.
Because I have seen their books. There is no way one can sell shares at such valuations (even at 400, the PE ratio is 62, chk prospectus pg 106) with such low margins (less than 3% in 14-15). Varun may be biggest bottler of Pepsi but that means nothing if the company is not profitable for two in the last four years.
Frankly, comparison with Manpasand is laughable. Manpasand is a strong and growing brand and keeps all its profits, Varun works as a contractor for Pepsi so obviously Pepsi takes most of the profits. Just read more about Manpasand and you will see how fast it is growing. Varun beverages growth is decent but nothing when compared to Manpasand.
Correct me if i am wrong, but isn’t the low margins and losses in the two of the last 4 years largely due due to to interest and depreciation, which is result of large scale expansions ? In IPO will dilute interest costs, and new expansions will result in better bottom lines,
Also i understand the Per capita consumption of soft drinks in India is even lower than Pakistan as of today, leaving huge path for grown in even the short to medium time span.
You have some good points. Here are some thoughts – interest costs will come down, depreciation will not. Expansions work best when plants run at max capacity and India may never have soft drink consumption per capita close to US. Cold drinks were fashionable 5-10 years back but old now. IMO, Varun is late in the game, they could have received valuations like Jubilant Food earlier but not now.
Plus the entire industry might see a lot of headwinds due to very high “demerit” taxes as part of the new GST roll out. They are planning to tax sugary drinks at about 40% with Coke saying they might be shutting factories in India if that happens.
Good point Navneet but I’m not sure cold drinks can be taxed at 40%. It is difficult to prove cold drinks are fit for ‘sin tax’, tobacco products are easy targets. Even most public will happily agree on 40% tax on tobacco and alcohol drinks. What I fear the most is that this government can tweak and change rules to benefit Baba Ramdev.
Let me correct myself. My earlier remarks were based on IPO price of 600
Six month diluted EPS (post conversion) 13.69 (source RHP, page 113). Their first half is stronger than the second half for the simple reason that India is a hot country. Simple annualization EPS comes around 23-24. This means the IPO is priced at a PE ratio of 18-19. Not bad, am still going through prospectus.
Haha, the noble soul he is, Sinha ji is quick to correct himself.
bull sinha just made a u turn. is it a buy call from you for varun ipo?
Yes, because the IPO price is less that earlier forecasts and the company had better results in 6 months. I know it raises suspicion that books are cooked but Im now happy to take a chance. It will be oversubscribed for sure so will get just one lot. I’m happy to hold if it lists lower, I believe the downside is limited now.
And this is not a recommendation. It suits my risk profile, may not be the case with you. If you want assured returns, mutual funds or fixed deposits are good bets (no pun intended).
What is the latest gmp/kostak in Varun beverages???
Zero, no grey market trades.
@Sinha ji, you seem to have some insider information. Should I put a small application?
Wrong information. Thin trades but wrong to claim that no transactions are taking place.
i do not no
What are the thoughts about anchor investors, I see good demand but all foreign funds, only Sundaram among DIIs
Anchor book is good enough. Just see the final subscription figures.
First day subscription is good, expect a market heavyweight to buy on the last day…
Sinhaji, why this suspense. Please tell directly. I find this IPO interesting and agree with Krishna’s analysis here but worried that the price is high so listing profits not guaranted.
There is no investor in varun, just hawabaazi. Subscription numbers just ordinary so far….
All those ppl saying no investors in Varun, mind that the ipo is fully subscribed on the second day. Figure out what will happen tomorrow.
Happy Diwali to everyone 🙂
420 listing prize
Deep correction in the market, all IPOs will be in loss or very small profit from here. Be cautious, it is your own money so take care yourself.
Allotment status available now at Karvy wesbite using application number.
No need Minal, everyone will get allotment in this dud and will lose money.
no trades at ll in varun beverages. it will list at a discount for sure. thankfully i did not apply
Pleased with decent listing. Now all the ppl claiming it will be a disaster are quiet. I’m waiting to make 20% return on my application
bull-sinha, it is only 2% profit and you are celebrating!! You should be thanking god that the listing was good and should get out of Varun.
@Marathi Manus, let’s see what the future has for us. You are free to take your call. I’m not in loss so don’t mind holding Varun for another month. The worries of GST have gone away now…
bull_sinha, are you there?
Yes i’m here. Why?