Buy Varun Beverages, target price Rs 875: Emkay Global

Emkay Global has given a buy rating to Varun Beverages with a target price of Rs 875. The share price moved up by 0.34 per cent from its previous close of Rs 671.80. The stock’s last traded price is Rs 674.10.

Varun Beverages Ltd., incorporated in the year 1995, is a Large Cap company (having a market cap of Rs 19254.09 Crore) operating in FMCG sector.

Financials
For the quarter ended 30-09-2020, the company reported a Consolidated sales of Rs 1802.63 Crore, up 9.90 % from last quarter Sales of Rs 1640.18 Crore and up 3.62 % from last year same quarter Sales of Rs 1739.73 Crore Company reported net profit after tax of Rs 161.47 Crore in latest quarter.

Investment Rationale
Under-penetration and juice distribution expansion should help above-industry growth. Asset turns should keep improving, leading to healthy RoIC improvement. Expect Sales/ EBITDA/EPS CAGRs of 13%/14%/28% in CY19-22E.

Promoter/FII Holdings
Promoters held 66.4 per cent stake in the company as of Sept 30, 2020, while FIIs held 20.8 per cent, DIIs 6 per cent and public and others 6.9 per cent.