Shares of the food and beverage giant, a partner of PepsiCo, surged nearly 2 percent to Rs.618 per share after reputed brokerage firm HSBC set a target price indicating an upside growth potential.
Price Movement
In Tuesday’s trading session, Varun Beverages Ltd.’s share price peaked at an intraday high of Rs.618, a 2 percent increase from the previous close of Rs.608.55. However, the price has since retreated to Rs.617 per share. Since its November 8, 2016 listing, the stock has provided remarkable returns of over 2200 percent.
What happened
International Brokerage and Wealth Management firm, HSBC has initiated coverage on Varun Beverages, giving the stock a ‘buy’ rating with a price target of Rs.780, indicating an upside potential of over 27 percent.
The brokerage’s optimistic outlook is based on the belief that Varun Beverages could become the largest and most disruptive bottler for PepsiCo in the company’s history.
HSBC also highlighted the emergence of disruptive digital market development models, fueled by new AI tools and strategies, which could further accelerate Varun Beverages’ growth. The firm noted that if Varun Beverages adopts these tools more swiftly than its competitors, it could gain momentum and increase its market share.
Additionally, HSBC anticipates heightened competition in India’s bottling industry as AI tools transform the market landscape.
Alongside HSBC, Axis Securities also has a positive outlook for Varun Beverages, predicting the company will maintain strong growth following its strategic acquisition of a beverage firm, boosting its presence in South Africa and the Democratic Republic of Congo.
Brand Portfolio
PepsiCo’s carbonated soft drink (CSD) brands manufactured and sold by VBL include Pepsi, Pepsi Black, Mountain Dew, Sting, Seven-Up, Mirinda, Seven-Up Nimbooz Masala Soda, and Evervess.
The non-carbonated beverage (NCB) brands produced and sold by VBL comprise Slice, Tropicana Juices, Seven-Up Nimbooz, Gatorade, and packaged drinking water under the Aquafina brand.
Financial Performance
In its recent financial update, Varun Beverages Ltd. reported net sales of Rs.7,197 crore for Q1 FY25, representing a 28.3 percent increase from Rs.5,611 crore in the same quarter last
year. The company’s net profit for the quarter was Rs.1,262 crore, up from Rs.1,005 crore in Q1 FY24, reflecting a 25.6 percent increase.
Company Overview
Varun Beverages Ltd. is a leading franchisee of PepsiCo, primarily engaged in the manufacture and distribution of a wide range of carbonated and non-carbonated beverages, including popular brands like Pepsi, Mountain Dew, and Tropicana.
Written by – Siddesh S Raskar
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