Varun Beverages stock jumps 4% on stock split record date; Should you buy or sell?

Shares of Varun Beverages surged 4 percent to ₹1,588 per share on September 11, in anticipation of its 2:5 stock split record date. As a result, the stock will begin trading on an ex-split basis starting tomorrow, September 12.

The board of directors has established September 12 as the 'record date,' the deadline for determining which shareholders qualify for the company's stock split. In this split, each existing share with a nominal value of ₹5 will be split into shares with a nominal value of ₹2.

In June 2023, Varun Beverages had previously executed a share split, lowering the face value from ₹10 to ₹5. This upcoming split will further decrease the face value of each share.

Typically, a company carries out a stock split to lower the price per share, making it more accessible to smaller investors. Despite this, the overall value of the company and the total value of an investor's holdings remain unchanged. By increasing the number of shares at a reduced price, a stock split can also enhance trading volume and liquidity.

In the recently ended June quarter, Varun Beverages achieved a 26 percent year-on-year (YoY) growth, reaching ₹1,262 crore, fueled by volume increases and better margins. The company's revenue climbed 28.3 percent YoY to ₹7,333 crore. On the operating front, EBITDA surged 31.8 percent YoY to ₹1,991 crore, while margins improved by 74 basis points YoY to 27.7 percent.

Should you buy or sell?

Brokerage firm Emkay Global has maintained ‘add’ rating with a target price of ₹1,650. “We build-in this opportunity, giving a ~4% nudge to the TP multiple to 58x. Maintain ADD with revised TP to Rs1,650/sh,” the firm said in a note.

Elara Securities analysts have maintained an 'accumulate' rating and increased the target price to ₹1,780 per share from ₹1,590, based on a 55x (unchanged) FY26E P/E ratio as we adjust to September 2026E. The primary downside risk is weaker-than-expected volume growth.