Varun Beverages: Given again the strong growth seen in volumes and the outperformance versus estimates, Nuvama Institutional Equities has increased its 2023/2024 Ebitda and PAT estimates by 1-2 per cent and 5-6 per cent, respectively. Shares of PepsiCo bottler Varun Beverages were trading 2 per cent higher in Wednesday's trade as analysts upped their price targets on the stock post March quarter results and stock split announcement. Analysts said a strong Volume and higher realisations drove first quarter growth for Varun Beverages but added that Campa Cola’s scale-up is a key monitorable. Any impact, if at all, will be visible from next year, they said.
Emkay Global said Varun Beverages' Q1 Ebitda was 10-15 per cent ahead of Street estimates, led by strong traction in India operations and better mix (smaller cases). While traction in star performer Sting continues, Varun Beverages is committing capital to future growth drivers such as value-added dairy, juice and sports drinks, it said.
"With improved affordability, Varun Beverages remains confident about demand for new products and plans improving supply by leveraging its two new manufacturing capacities in 2024 and its existing distribution/visi-cooler network. The Q1 beat leads to a 1-2 per cent increase in our EPS estimate, but we see scope for a higher 5-7 per cent increase in Street estimates. Sting has seen huge success. A similar traction in the new products can surprise positively," it said while upping its target on the stock to Rs 1,700 per share against Rs 1,660 earlier.
Reliance Securities has upped its target on the stock to Rs 1,560 from Rs 1,450.
The stock rose 2.32 per cent to hit a high of Rs 1,450 on BSE. Shares of the bottler are up 8.47 per cent in 2023 so far.
Given again the strong growth seen in volumes and the outperformance versus estimates, Nuvama Institutional Equities has increased its 2023/2024 Ebitda and PAT estimates by 1-2 per cent and 5-6 per cent, respectively. It values Varun Beverages at 45 times 24 PE, in-line with India F&B average, and has a target of Rs 1,646 on the stock.
Kotak Institutional Equities said Varun Beverages is well-placed to deliver 15 per cent volume and 25 per cent earnings CAGR over 2022-2024, led by continued success of ‘Sting’, significant capacity expansions, introduction/pan-India rollout of new products (dairy, juices, Gatorade, Rockstar) starting 2024, distribution expansion by 10-15 per cent per year and further share gains in underpenetrated markets.