Varun Beverages, the PepsiCo bottler, witnessed a surge in its stock price, climbing over 5% in early trading on Tuesday. This rally came on the heels of the company announcing its impressive Q1 earnings results. The FMCG stock rose by 5.45% to Rs 1,558.45, compared to the previous close of Rs 1,477.80 on the BSE. The stock even touched its all-time high of Rs 1,560.30 on February 26, 2024.
The company’s Q1 net profit soared by 25% to Rs 547.9 crore, a significant increase from Rs 438.95 crore in the corresponding quarter of the previous fiscal year. Varun Beverages’ revenue also witnessed a healthy growth of 11.2%, reaching Rs 4,397.9 crore, as per the regulatory filing. It’s worth noting that the company follows the January-December financial year.
Reflecting the strong performance, a total of 1.26 lakh shares of the firm changed hands, amounting to a turnover of Rs 19.33 crore on the BSE. The market capitalization of Varun Beverages rose to an impressive Rs 1.98 lakh crore. Over the past two years, the stock has skyrocketed by 316%, and an astonishing 603.38% in three years.
Analysts at Motilal Oswal have assigned a target price of Rs 1,720 for the stock following the Q1 earnings. They cited improved EBITDA margins, which expanded by 240 basis points year-on-year, driven by increased gross margins (up 390 basis points year-on-year) due to decreased PET prices, efforts to minimize sugar content, and the adoption of lighter packaging materials.
Meanwhile, Nuvama has raised its price target to Rs 1,690 from the earlier target of Rs 1,492, citing Varun Beverages’ potential to be a top-tier performer in the space, akin to Nestle’s valuation of 70x. They have assigned a PE multiple of 60x (earlier 55x) and expect valuations to sustain as rural demand recovers.
Technically, the relative strength index (RSI) of Varun Beverages stands at 53.8, indicating that the stock is trading neither in the overbought nor oversold zone. The stock is trading higher than the 5-day, 10-day, 20-day, 30-day, 50-day, 100-day, 150-day, and 200-day moving averages.
Varun Beverages is a beverage company that operates as a franchisee of PepsiCo. It produces and distributes a range of carbonated soft drinks (CSDs) and non-carbonated beverages (NCBs), including packaged drinking water, under trademarks owned by PepsiCo.
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