Varun Beverages shares: Choice sees positive technical setup, signals nearly 12% upside in a month

Choice Equity Broking on Monday pointed to a favourable technical setup in Varun Beverages Ltd (VBL), indicating scope for an upside potential in the near term.

Sumeet Bagadia, Executive Director at Choice, said VBL is witnessing a constructive trend continuation after a prolonged consolidation phase. According to him, the stock has formed a rising channel on daily charts, marked by higher highs and higher lows, which typically signals the development of an uptrend. He added that price action remains well supported near the lower end of the channel, indicating "sustained buying interest during declines."

Bagadia noted that the stock has reclaimed its 20-day and 50-day exponential moving averages (EMAs), both of which are now sloping upward, reflecting improving short-term momentum. VBL is also trading just above the 100-day EMA, while the 200-day EMA, positioned around the Rs 490–492 zone, continues to act as a key medium-term resistance-cum-support pivot. A sustained hold above this cluster, he said, strengthens the overall bullish structure.

On the volume front, Bagadia pointed out that participation has increased during upward moves, while corrective phases have seen comparatively lower volumes. This, he explained, suggests accumulation rather than distribution. Structurally, the Rs 470 level has emerged as an important demand zone, coinciding with the lower boundary of the rising channel and previous swing lows. This level has been identified as a stop-loss, as long as the stock holds above it.

Based on the technical setup, Choice has recommended a 'Buy' call on Varun Beverages with a target price of Rs 554 and a stop loss at Rs 470, with a one-month investment horizon.

Meanwhile, shares of Varun Beverages settled 0.90 per cent lower at Rs 495.75 on Monday. At this level, the suggested target price implies an upside potential of 11.75 per cent from the closing price.

The company operates franchisee of PepsiCo. It 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.