Varun Beverages shares hit record high; is there more steam left in the multibagger stock?
Multibagger stock: Varun Beverages shares have risen for the fourth consecutive session today. Market cap of Varun Beverages rose to Rs 1.18 lakh crore.
- Aug 17, 2023,
- Updated Aug 17, 2023 11:28 AM IST
Shares of Varun Beverages hit a record high in early trade today amid a weak sentiment in the broader market. The stock gained 2.53% to hit a record high of Rs 913 in early deals against the previous close of Rs 890.45 on BSE. The stock has risen for the fourth consecutive session today. Market cap of Varun Beverages rose to Rs 1.18 lakh crore. With today’s rally, the Varun Beverages stock has climbed 246% and 75% in two years and one year, respectively. In the last three years, the stock has delivered multibagger returns of 425%.
The FMCG stock has gained 101% from its 52 week low of Rs 454 hit on August 22, 2022.
In the current session, total 0.85 lakh shares of the firm changed hands amounting to a turnover of Rs 7.63 crore on BSE.
In terms of technicals, the relative strength index (RSI) of Varun Beverages stands at 73.7, signaling the stock is trading in the overbought zone. The stock has a one-year beta of 0.8, indicating low volatility during the period. Varun Beverages shares are trading higher than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages.
Here’s a look at the outlook of the multibagger FMCG stock.
Abhijeet from Tips2tades said, "Despite strong and consistent fundamentals in terms of profit growth and improving ROCE, Varun Beverages remains undervalued fundamentally and has potential to move higher from a long-term perspective. Technically, Rs 860 is a strong resistance on the Daily charts. A daily close above this resistance could lead to targets of Rs 925- Rs 1027 in the coming weeks. Strong support will be at Rs 720."
Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher said,"The stock has been in consolidation with narrow rangebound movement witnessed for quite some time maintaining the support near the significant 50EMA level of Rs 805 zone and upside a decisive breach above Rs 850 levels is needed to indicate a breakout and anticipate for further rise. Keeping the stop loss near 800 zone one can stay invested and anticipate for further gains with next target of Rs 930 expected once a breakout above Rs 850 zone is confirmed.”
Also read: Hot stocks on August 17, 2023: Adani Power, Suzlon Energy, IRFC, Cipla and more
Axis Securities in its Q2 earnings review listed out five factors which can ensure strong growth for the company.
"We believe Varun Beverages is expected to continue its strong growth momentum, which will be led by 1) Normalcy of operations and market share gains in newly acquired territories (post COVID-19 disruptions), 2) The management's continued focus on the efficient go-to-market execution in acquired and underpenetrated territories as reflected in its recently commissioned Bihar plant operations (it has started gaining market share), 3) Expansion in its distribution reach to 3.5 Mn outlets in CY23 from 3 Mn currently, 4) Focus on expanding high-margin Sting energy drink across outlets coupled with increased focus on expansion of value-added Dairy, sports drink (Gatorade) and Juice segment and 5) Robust growth in the International geographies led by focused execution," said Axis Securities.
The brokerage has assigned a price target of Rs 920 to the stock.
The company follows the January-December format for reporting its earnings .
The firm reported a 25.36 per cent rise in Q2 consolidated net profit at Rs 1,005.42 crore led by revenue growth and improvement in margins. The company logged a net profit of Rs 802.01 crore during the April-June quarter a year ago.
Revenue from operations rose 13.6% in the June quarter to Rs 5,699.73 crore against Rs 5,017.57 crore revenue of the corresponding period last fiscal. Net realisations climbed 8.3 percent to Rs 179 on account of continued improvement in mix of smaller SKUs (250 ml) as compared to the base quarter.
Operating profit or EBITDA, zoomed 21 percent to Rs 1,510.9 crore in Q2 compared to Rs 1,250.4 crore in the year-ago quarter. EBITDA margins came at 26.5 percent versus 25 percent year-on-year led by higher gross margins and operational efficiencies.
In the March quarter too, Varun Beverages reported a strong set of earnings. Net profit in Q1 climbed 69 percent year-on-year to Rs 429 crore. Operating profit or EBITDA climbed 50 percent to Rs 798.1 crore. EBITDA margin in the March quarter rose 170 basis points year-on-year to 20.5 percent.
Revenue rose 38 percent to Rs 3,893 crore on a year in year basis. Revenue growth was led by robust volume growth and an increase in net realisations.
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Shares of Varun Beverages hit a record high in early trade today amid a weak sentiment in the broader market. The stock gained 2.53% to hit a record high of Rs 913 in early deals against the previous close of Rs 890.45 on BSE. The stock has risen for the fourth consecutive session today. Market cap of Varun Beverages rose to Rs 1.18 lakh crore. With today’s rally, the Varun Beverages stock has climbed 246% and 75% in two years and one year, respectively. In the last three years, the stock has delivered multibagger returns of 425%.
The FMCG stock has gained 101% from its 52 week low of Rs 454 hit on August 22, 2022.
In the current session, total 0.85 lakh shares of the firm changed hands amounting to a turnover of Rs 7.63 crore on BSE.
In terms of technicals, the relative strength index (RSI) of Varun Beverages stands at 73.7, signaling the stock is trading in the overbought zone. The stock has a one-year beta of 0.8, indicating low volatility during the period. Varun Beverages shares are trading higher than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages.
Here’s a look at the outlook of the multibagger FMCG stock.
Abhijeet from Tips2tades said, "Despite strong and consistent fundamentals in terms of profit growth and improving ROCE, Varun Beverages remains undervalued fundamentally and has potential to move higher from a long-term perspective. Technically, Rs 860 is a strong resistance on the Daily charts. A daily close above this resistance could lead to targets of Rs 925- Rs 1027 in the coming weeks. Strong support will be at Rs 720."
Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher said,"The stock has been in consolidation with narrow rangebound movement witnessed for quite some time maintaining the support near the significant 50EMA level of Rs 805 zone and upside a decisive breach above Rs 850 levels is needed to indicate a breakout and anticipate for further rise. Keeping the stop loss near 800 zone one can stay invested and anticipate for further gains with next target of Rs 930 expected once a breakout above Rs 850 zone is confirmed.”
Also read: Hot stocks on August 17, 2023: Adani Power, Suzlon Energy, IRFC, Cipla and more
Axis Securities in its Q2 earnings review listed out five factors which can ensure strong growth for the company.
"We believe Varun Beverages is expected to continue its strong growth momentum, which will be led by 1) Normalcy of operations and market share gains in newly acquired territories (post COVID-19 disruptions), 2) The management's continued focus on the efficient go-to-market execution in acquired and underpenetrated territories as reflected in its recently commissioned Bihar plant operations (it has started gaining market share), 3) Expansion in its distribution reach to 3.5 Mn outlets in CY23 from 3 Mn currently, 4) Focus on expanding high-margin Sting energy drink across outlets coupled with increased focus on expansion of value-added Dairy, sports drink (Gatorade) and Juice segment and 5) Robust growth in the International geographies led by focused execution," said Axis Securities.
The brokerage has assigned a price target of Rs 920 to the stock.
The company follows the January-December format for reporting its earnings .
The firm reported a 25.36 per cent rise in Q2 consolidated net profit at Rs 1,005.42 crore led by revenue growth and improvement in margins. The company logged a net profit of Rs 802.01 crore during the April-June quarter a year ago.
Revenue from operations rose 13.6% in the June quarter to Rs 5,699.73 crore against Rs 5,017.57 crore revenue of the corresponding period last fiscal. Net realisations climbed 8.3 percent to Rs 179 on account of continued improvement in mix of smaller SKUs (250 ml) as compared to the base quarter.
Operating profit or EBITDA, zoomed 21 percent to Rs 1,510.9 crore in Q2 compared to Rs 1,250.4 crore in the year-ago quarter. EBITDA margins came at 26.5 percent versus 25 percent year-on-year led by higher gross margins and operational efficiencies.
In the March quarter too, Varun Beverages reported a strong set of earnings. Net profit in Q1 climbed 69 percent year-on-year to Rs 429 crore. Operating profit or EBITDA climbed 50 percent to Rs 798.1 crore. EBITDA margin in the March quarter rose 170 basis points year-on-year to 20.5 percent.
Revenue rose 38 percent to Rs 3,893 crore on a year in year basis. Revenue growth was led by robust volume growth and an increase in net realisations.
Also read: Stuck in IRCTC shares since one year? Here’s what you should do
Also read: Adani Power becomes the fourth Adani Group company in GQG's portfolio.