Shares of Varun Beverages were trading lower on Monday despite the company's board set to meet on 9th October 2024 to discuss a potential fundraising move through Qualified Institutions Placement (QIP). The multibagger stock fell by 3.41%, closing at ₹559.20 compared to the previous close of ₹578.95 on the Bombay Stock Exchange (BSE). This decline resulted in a reduction of the company's market cap, which fell to ₹1.83 lakh crore, raising concerns for those involved in share market investment.
The upcoming board meeting, scheduled for 9 October 2024, will discuss raising funds through Qualified Institutions Placement (QIP). The announcement of this fundraising proposal comes at a critical time for Varun Beverages, especially for those considering the stock as part of their share market investment strategy.
Stock performance and technical indicators
Varun Beverages, which has been a strong performer in the past, witnessed a dip in its share price. Despite the recent fall, the stock has delivered significant returns over the years, with a 148% gain in two years and a staggering 366% return in the last three years, making it one of the multibagger stocks in the Indian market.
From a technical analysis perspective, Varun Beverages' relative strength index (RSI) stands at 35.1. This suggests that the stock is currently neither overbought nor oversold. Additionally, the shares are currently trading below all its key moving averages, including the 5-day, 10-day, 20-day, 30-day, 50-day, 100-day, 150-day, and 200-day moving averages. This might influence share market investment decisions, as investors often rely on these indicators to determine the right time to buy or sell.
Board meeting agenda
On 6th October, Varun Beverages informed the exchanges about the upcoming board meeting scheduled for 9th October. The company stated that the board of directors would discuss and consider raising funds through the issuance of equity shares via QIP.
According to the company's filing with the Securities and Exchange Board of India (SEBI) under Regulation 29(1)(d) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the board meeting will include two key agenda items:
Investors involved in share market investment will be closely watching the outcome of this meeting, as the fundraising move could significantly impact the company's financial structure and growth plans.
Analyst views and target price
Global brokerage firm HSBC has placed a 'buy' call on Varun Beverages, assigning a target price of ₹780 per share. The firm sees potential in Varun Beverages due to its strong market position and low soft drink penetration in India, which is a positive factor for long-term share market investment.
HSBC believes that Varun Beverages' planned fundraising through QIP could provide the company with the capital needed to expand and further cement its place in the industry. For those considering share market investment, the long-term growth prospects look promising despite the current dip in share price.
Market outlook
Despite the slip in share price, Varun Beverages remains a strong player in India's beverage sector. The board's decision to consider fundraising through QIP could provide the company with additional financial resources to fuel its growth and expansion. Investors are likely to keep a close eye on the outcome of the board meeting and any subsequent developments related to the QIP.
The firm's stronghold in PepsiCo's bottling operations, combined with its diverse product portfolio, makes Varun Beverages an appealing option for long-term share market investment. Investors will be keeping a close watch on the outcome of the board meeting, as it may shape the future performance of the stock in the share market investment space.
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