Varun Beverages share price rose in trade today after the firm said credit rating agency CRISIL has upgraded the company's credit ratings. Varun Beverages share price rose up to 4.48% to Rs 648 compared to the previous close of Rs 620.20 on BSE. The stock closed 1.63% higher at Rs 630.30 on BSE.
Varun Beverages stock traded higher than its 5-day, 20-day, 50-day, 100-day and 200-day moving averages. The mid cap share has gained 20% since the beginning of this year and risen 24% during the last one year. The firm's long-term rating has been upgraded from 'CRISIL AA-/Positive') to CRISIL AA/Stable.
Crisil has reaffirmed the firm's short-term rating to CR1SIL A1+, Varun Beverages said. In September-end, CLSA maintained its buy call on the stock and raised the target price to Rs 860 from Rs 783 per share. The research firm said that the consolidation phase was over while balance sheet parameters were likely to improve.
CLSA projected return on equity improving to 20 percent by CY21 and raised earnings by 9-14 percent. On September 20, GST Council headed by Finance Minister Nirmala Sitharaman decided to charge caffeinated beverages with 28 per cent tax plus a 12 per cent compensation cess in place of the current tax rate of 18 per cent.
Responding to the hike, PepsiCo India's bottling partner Varun Beverages said the recent hike in GST rates for caffeinated drinks would have a minimal effect on the company.
"With regard to the increase in GST rates for caffeinated drinks, the effect on Varun Beverages is expected to be minimal as the incremental volumes that will come under the higher GST bracket was approximately 0.7 million cases out of 340 million cases of sales volume based upon CY 2018," the company said in a regulatory filing.
The firm is engaged in manufacturing, selling, bottling and distribution of beverages of Pepsi brand. The company produces and distributes a range of carbonated soft drinks (CSDs), as well as a selection of non-carbonated beverages (NCBs), including packaged drinking water.