Monday, December 26, 2016

Varun beverages : stock review post listings

Varun Beverages hit the primary market in Oct 2016. The IPO was priced in the range of Rs 440-445.

Within 2 months of listings the stock is trading around Rs 358, down by Rs 87.

This is what we wrote while analysing the IPO:

Bottles are empty - avoid the IPO.

The company is likely to report an EPS around Rs 9 for CY 16. The offer at the upper end made at 50 plus PE, which is expensive. The company has limited history of profitability.  Funds from the fresh issue of equity will be utilized towards repayment of debt / general corporate exps.

The company, virtually is offering empty bottles to the investors.

Other than high percentage of promoters holdings (70 plus percentage), there are are no positive factors in the offer.


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