Shares of one of the largest bottling partners for PepsiCo in the world, gained nearly 3% to an intraday high of ₹1,673.70 per share on wednesday after Foreign Broker CLSA gave a target on the stock with an upside of 22%.
Varun Beverages Limited (“VBL” or the “Company”) is a key player in the beverage industry and one of the largest franchisees of PepsiCo in the world (outside the USA).
The company manufactures, distributes, and sells a wide 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.
Varun Beverages Ltd shares experienced a 101 percent increase over the past 12 months, followed by a 38 percent decline in the last six months.
Varun Beverages Ltd reported a revenue growth of 11% year-on-year, achieving ₹4,317 crore in Q4FY24, up from ₹3,893 crore in Q4FY23. Concurrently, net profit increased by 25%, climbing from ₹439 crore to ₹548 crore.
CLSA retains Buy call on Varun Beverages Ltd. with a target price of ₹1,977 per share, representing an upside of 22 percent from Wednesday’s trading price of ₹1,616 per share.
Foreign brokerage CLSA has maintained its positive outlook on the company, citing the increased affordability of its products and a growing market size as key drivers of growth. CLSA highlighted that the company’s new offerings and expansion into new territories and products will support sustained growth for the PepsiCo bottler.
Additionally, CLSA noted that some of Varun Beverages’ soft drinks and energy drinks are now competitively priced with tea, coffee, and fruit juices. Enhanced affordability and extensive distribution networks are also facilitating deeper market penetration.
CLSA also mentioned that acquisitions could continue to drive the company’s growth. Last quarter, Varun Beverages completed the acquisition of The Beverage Company (BevCo) in South Africa, signaling a strategic focus on the African market. As a result, CLSA has increased the target multiple on Varun Beverages from 48x to 59x.
Earlier, Anand Rathi issued a buy call on Varun Beverages with a target price of ₹1900. The broker anticipates strong growth for Varun Beverages due to several factors, including strategic investments in enhancing production capabilities and new acquisitions that have significantly strengthened their global presence.
Written by Omkar Chitnis
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