A leading beverage manufacturer known for its carbonated drinks and strategic market expansions is in focus after a global investment bank initiated a ‘Buy’ rating with a 25 percent upside target. The bullish outlook cites its entry into energy drinks and hydration segments, along with confidence in fending off competition from new market entrants.
Varun Beverages Limited’s stock, with a market capitalisation of Rs. 1,63,783 crores, rose to Rs. 491.60, hitting a high of up to 1.84 percent from its previous closing price of Rs. 482.70. However, the stock over the past year has given a negative return of 19 percent.
Target By Goldman Sachs
Goldman Sachs has initiated coverage on Varun Beverages Ltd. (VBL) with a ‘Buy’ rating and a target price of Rs 600 per share, reflecting an upside potential of 24 percent from current levels. The brokerage believes that India’s relatively low per capita consumption of ready-to-drink beverages provides ample room for expansion. VBL, PepsiCo’s bottling partner in India, has steadily gained market share, boosting Pepsi’s share from 28 percent in 2015 to 38 percent in 2024, making India a standout market for the brand globally.
Rationale
Goldman Sachs expects this momentum to persist, driven by emerging demand segments such as energy drinks and hydration products. The firm highlighted that new competitors, including Campa Cola, are unlikely to pose a significant threat to VBL’s strong market positioning. With India’s beverage consumption expected to rise, VBL is strategically placed to benefit from these trends, leveraging its distribution strength and PepsiCo’s global portfolio to deepen its market reach.
Also read: Transformer stock jumps 10% after reporting 1,733% YoY net profit growth in Q4
Results Vs. Estimates
The company reported revenue of Rs 5,566.94 crore, beating Bloomberg’s estimate of Rs 5,476 crore. EBITDA rose to Rs 1,263.96 crore, above the Rs 1,235 crore estimate. Net profit stood at Rs 726.49 crore, slightly below the estimated Rs 741 crore.
Financial Highlight
The company reported robust performance in Q4FY25, with revenue rising 29 percent YoY to Rs. 5,567 crore from Rs. 4,317 crore in Q4FY24 and jumping 51 percent QoQ from Rs. 3,689 crore in Q3FY25. Profit also surged significantly, up 33 percent YoY to Rs. 731 crore compared to Rs. 548 crore in Q4 FY24 and is up 273 percent QoQ from Rs. 196 crore in Q3FY25, reflecting strong operational leverage and improved margins.
Over the past three years, the company has delivered a healthy growth trajectory with a profit CAGR of 55 percent, sales CAGR of 31 percent, and ROE CAGR of 28 percent, highlighting consistent execution and value creation. The sharp sequential and annual growth in both revenue and profit underscores the company’s accelerating business momentum and strong earnings visibility.
Written By Fazal Ul Vahab C H
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
