Shares of Varun Beverages have delivered multibagger return to its shareholders. The large-cap stock has delivered over 195 per cent in the last two years and over 600 per cent return in the last five years. It is also up over 100 per cent in the past one year.
Varun Beverages on Dalal Street
Shares of Varun Beverages ended 3 per cent lower at Rs 1305.75 on BSE on March 16, 2023. The market cap of the firm fell to Rs 84,816.04 crore.
It hit a 52-week high of Rs 1,432.05 on December 12, 2022, and a 52-week low of Rs 610.34 on March 17, 2022. The multibagger stock has recovered over 114 per cent from its 52-week low.
More room to rally?
Motilal Oswal expects the company to maintain its earnings momentum, underpinned by high demand due to the early onset of summer, high temperature and further possibility of an El Nino event, increased penetration in newly acquired territories in South and West India, and higher acceptance of newly launched products.
The brokerage has a 'Buy' rating on the stock with a target price of Rs 1,620, suggesting an upside potential of over 24 per cent.
Kotak Institutional Equities has increased its 2023 and 2024 EPS estimates by 8-10 per cent and revised its fair value for the stock to Rs 1,500 from Rs 1,200 earlier, valuing Varun Beverages at 40 times March 2025E PE. It now has a 'Buy' rating on the stock against the 'Add' rating earlier.
Axis Securities also has a 'Buy' rating on the stock with a target price of Rs 1,500. The brokerage believes that the company is well placed under the current market situation as the early onset of the summer season is expected to drive overall beverage sales across regions.
Varun Beverages: Q3 performance
The company reported better-than-expected December quarter results, thanks to strong volume growth and higher realisation. It posted a 150 per cent year-on-year (YoY) jump in consolidated profit at Rs 81.52 crore for the December quarter compared with Rs 32.59 crore in the same quarter last year.
Revenue for the December quarter rose 23 per cent to Rs 2,257.20 crore from Rs 1,764.94 crore YoY.
About Varun Beverages
The company is PepsiCo’s second largest franchisee (outside the US), possessing rights to
manufacture, distribute and sell carbonated soft drinks, fruit juice-based drinks, packaged drinking water, sports drinks and energy drinks.
In 2022, Varun Beverages entered into an agreement to distribute and sell Lays, Doritos and Cheetos for PepsiCo in the territory of Morocco.
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