Varun Beverages shares gain after four sessions; here’s why

Shares of Varun Beverages rose over 6% today after brokerage Jefferies retained buy rating on the stock. Varun Beverages stock touched an intraday high of Rs 1205.80, rising 6.26 per cent against the previous close of Rs 1134.80 on BSE. Shares of Varun Beverages have gained after 4 days of consecutive fall. They are trading higher than the 100-day and 200-day moving averages but lower than 5-day, 20 day and 50-day moving averages. In a year, the stock has zoomed 96% but lost 9.29% in 2023. Market cap of the firm rose to Rs 77,945 crore. A total of 0.62 lakh shares of the firm changed hands, amounting to a turnover of Rs 7.29 crore on the BSE. 

In terms of technicals, the relative strength index (RSI) of Varun Beverages stands at 29.9, signaling the stock is oversold. The stock has a one-year beta of 0.7, indicating low volatility during the period. 

Jefferies sees an upside of over 28 percent from the current market price in the Varun Beverages stock. It has assigned a target of Rs 1,540 per share. The stock is down 20 percent from recent peak and trades at 40x CY23E P/E. It expects the company to enjoy industry-leading growth in revenue and earnings.

"Return on Capital Employed (RoCE) looks to expand this year. Execution is top-notch with attractive industry opportunity. Management guides for double-digit medium-term volume growth," it said.

In the September quarter of the current fiscal, the firm reported a 59% jump in its net profit at Rs 381.04 crore against a net profit of Rs 240.14 crore in the corresponding quarter a year ago. Sales rose 32.46% to Rs 3176.62 crore from Rs 2398 crore in the same period of 2021-22.

Varun Beverages Limited produces bottles and distributes beverages. The company operates as a franchisee of PepsiCo. Its diversified business conglomerate includes beverages, quick-service restaurants, dairy and healthcare.
 

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