Street cheers VBL's South Africa buy

High per-capita consumption in SA may boost growth potential: Analysts

- NIKITA VASHISHT

Varun Beverages Ltd’s (VBL's) acquisition of South Africa-based Twizza Proprietary is set to bring market share gains for the Indian beverage company as it strengthens presence in Africa's biggest soft drinks market, analysts said on Monday.

They added that favourable demographics and high per-capita consumption of beverages in that country could boost growth potential from Twizza’s acquisition.

“Twizza’s acquisition is in line with VBL’ ambition to tap the attractive Africa market. We believe the acquisition will strengthen the beverage company’s position in terms of pricing / promotional intensity in Africa’s largest soft drinks market. It may provide additional capacities to enable faster scale up and market share gains,” said analysts at JM Financial Institutional Equities.

‘The brokerage has maintained its ‘buy’ rating on VBL stock with a share price target of 570.

On the bourses, the stock of Varun Beverages gained 3.46 per cent on the BSE to close at 485.65 on Monday. In comparison, the BSE 100 rose 0.72 percent. On December 21, the VBL Board approved acquisition of 100 per cent share capital of Twizza Proprietary (Twizza) through its subsidiary company in South Africa — The Beverages Company Proprietary (Bevco).