Varun Beverages shares likely to hit Rs 1,600 mark; here’s why

Shares of Pepsico bottler Varun Beverages Ltd have doubled investor wealth in a year. The stock delivered 113% returns during the period. It has a high PE ratio of 90.66 compared to the sectoral PE of 103.53.  The price to book ratio of the stock is 28.72.

Varun Beverages shares gained 1.30% to Rs 1432.85 on Friday against the previous close of Rs 1414.40 on BSE.

The stock touched its all-time high of Rs 1560.30 on February 26, 2024 and fell to its 52 week low of Rs 633.30 on March 16, 2023.

A total of 0.44 lakh shares of the firm changed hands, amounting to a turnover of Rs 6.23 crore on BSE. Market cap of the firm rose to Rs 1.86 lakh crore. The stock zoomed 364% in two years and rose 568.62% in three years.

“We expect Varun Beverages to maintain its earnings momentum, aided by: 1) higher acceptance of newly launched products, 2) increased penetration in newly acquired territories in India and Africa, 3) continued expansion in capacity and distribution reach, 4) growing refrigeration in rural and semi-rural areas, and 5) a scale-up in international operations,” said Motilal Oswal.

“Factoring the strong fundamentals and potential for future growth (expect 21%/22%/28% revenue/EBITDA/PAT CAGR over CY23-26), we retain our BUY rating for the stock. We value the stock at 57x Mar’26E EPS to arrive at a target price of Rs 1,600,” added the brokerage.

In terms of technicals, the relative strength index (RSI) of Varun Beverages stands at 54.8, signaling the stock is trading neither in the overbought and nor in the oversold zone. Varun Beverages shares stand higher than the 5 day, 10 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.