Varun Beverages launches commercial production at Gorakhpur unit; stock drops over 2%

Shares of Varun Beverages Ltd, one of the largest franchisees of PepsiCo in the world (outside the US), has announced that the company has launched commercial production at its Gorakhpur unit in Uttar Pradesh.

In a stock exchange notification on Saturday, the company said that it has started commercial production of carbonated soft drinks and energy drinks at its Gorakhpur production facility.

The production of juices and value-added dairy products at the facility is, however, yet to start.

Following the announcement, shares of Varun Beverages dropped as much as 2.7% on Monday to hit an intraday low of ₹1,349.7 apiece on the National Stock Exchange of India (NSE). However, it soon trimmed its losses to trade around 0.94% lower at ₹1,372.8 apiece at 14:10 pm.

Shares of Varun Beverages have lost nearly 7% in the past five trading sessions. However, it has rallied almost 88% in the past one year.

Varun Beverages has been associated with PepsiCo since the 1990s. The company manufactures, distributes and sells a wide range of carbonated soft drinks, as well as a large selection of non-carbonated beverages, including packaged drinking water, sold under trademarks owned by PepsiCo.

Varun Beverages had laid the foundation stone of the Gorakhpur facility last year in April, with a total planned capital outlay of ₹1,100 crore.

Apart from Gorakhpur, the company was allotted land in Amethi, Prayagraj and Chitrakoot through fast-track mode for setting up manufacturing units for carbonated soft drinks, fruit pulp or juice-based drinks.

The company had then proposed to invest ₹3,740 crore in total in all the four plants in Uttar Pradesh.

Varun Beverages, which follows the calendar year for reporting finances, had posted net revenue of ₹16,042.58 crore in CY2023, up 21.8% from that in CY2022.