Varun Beverages on Wednesday became the latest firm to enter the elite club of companies with a market capitalisation of Rs one lakh crore. The stock of bottling company has more than doubled over the last one year, as consistent top-line growth along with market share gains cheered investor sentiment.
Shares of Varun Beverages surged close to seven percent on Wednesday –-- their biggest single day gains over the last three months. The stock has gained 21.5 percent so far in 2023 after a whopping 123 percent returns in 2022.
According to market participants, Varun Beverages continues to benefit from its relationship with PepsiCo, pan-India distribution network, backward integration, and increased in-home consumption. The company has added multiple growth engines such as launch of Sting, launch of dairy products and steady investments in capex and visi coolers.
ICICI Securities, which has a “Hold” rating on the stock observed “While we remain positive on Varun Beverages, we believe the stock price upside is capped at current valuations (41x CY24E), hence we maintain HOLD with a revised DCF-based target price of Rs1,400.”
Varun Beverages posted 69 percent year on year (y-o-y) increase in March quarter profit to Rs 429 crore. The net revenue of the company increased by 38 percent to Rs 38,93 crore driven by robust volume growth and increased net realization.
Over the last five years, sales volume of the company has grown at a CAGR of 24 percent. While the net revenue increased significantly at a CAGR of 26.7 percent , it’s EBITDA and PAT grew at 35.1 percent and 50.8 percent respectively during the same period.
First Published: May 10, 2023 5:28 PM IST
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