Varun Beverages shares rose 90% this year, overbought on charts; here are price targets for 2024

Shares of Pepsico bottler Varun Beverages Ltd have gained 90% in 2023. The stock has logged a majority of gains in the last six months, rising 53% during the period. The multibagger stock has zoomed 350% in two years. The beverages stock fell to a 52-week low of Rs 550 on February 3, 2023 and rose to a record high of Rs 1380.45 on December 20. Varun Beverages stock is a multibagger with returns of 350% and 526% in two and three years, respectively. The stock has gained 84.10% in a year. In the current session, Varun Beverages shares gained 1.62% intraday to Rs 1274.95 today against the previous close of Rs 1254.55 on BSE.

A total of 2.76 lakh shares of the firm changed hands, amounting to a turnover of Rs 34.28 crore on BSE. Market cap of the firm stood at Rs 1.62 lakh crore. The stock has a one-year beta of 0.2, indicating very low volatility during the period. 

Motilal Oswal Financial Services has assigned a target price of Rs 1,285 for the stock.

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“For Varun Beverages, we expect a CAGR of 17%/20%/26% in revenue/EBITDA/PAT over CY22-25. We value the stock at 55x CY25E EPS to arrive at a target price of Rs 1,285. We reiterate our BUY rating on the stock,” said the brokerage.

Brokerage Emkay Global said, “The market is mature, but we remain confident of share gains for VBL, given its strong track record in Zimbabwe and Nepal (over 50 per cent share now). Portfolio-led pricing gain is also a big opportunity, given 50 per cent lower realisations for Bevco vs. CCBA, a Coke bottler. Post 70 per cent run-up in the last 12 months, we have a Reduce rating on Varun Beverages. However, consistent outperformance versus peers and value creation in international geographies provide scope for further re-rating."

Axis Securities has revised its target price to Rs 1,450 per share against the previous close of Rs 1200 share.

“Varun Beverages has been in our top picks portfolio since long and we continue to remain positive on the stock on a mid to long-term basis. We estimate revenue/EBITDA/PAT CAGR of 23%/30%/35% over CY22-25E as we revised our CY24-25 PAT estimates upwards by 5%/12% based on the above mentioned rationales. We maintain our BUY rating on the stock with the revised target price of Rs 1,450/share (47x CY25EPS) vs. the earlier TP of Rs 1,200/share (45x CY25 EPS),” said the brokerage.  

In terms of technicals, the relative strength index (RSI) of Varun Beverages stands at 81, signaling the stock is trading in overbought zone. Varun Beverages shares are trading higher than the 5, day, 10 day, 20 day, 50 day, 100 day, 200 day moving averages.

Varun Beverages is a beverage company. It operates franchisee of PepsiCo. The company produces and distributes a range of carbonated soft drinks (CSDs), as well as a large selection of non-carbonated beverages (NCBs), including packaged drinking water sold under trademarks owned by PepsiCo.

Disclaimer: Business Today provides stock market news for informational purposes only and that should not be construed as an investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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