Buy Varun Beverages; target of Rs 680: Motilal Oswal

Motilal Oswal's research report on Varun Beverages

Varun Beverages (VBL) reported a revenue growth of 38% YoY in 4QCY24, led by volume growth of 38% YoY, which was majorly driven by the volume addition from South Africa and the Democratic Republic of Congo (DRC). Excluding these volumes, organic volume growth was ~5% YoY. Realization remained flat YoY at INR172/case. VBL ended the year on a high note, with healthy volume growth in India (~11%) and expansion in international markets (through acquisition and greenfield capacity expansion). Management has guided to continue this growth momentum with double-digit volume growth in the domestic market and a much higher growth rate in international markets. We largely maintain our CY25/CY26 earnings estimates. We reiterate our BUY rating on the stock with a TP of INR680.

Outlook

We largely maintain our CY25/CY26 earnings estimates. We value the stock at 55x CY26E EPS to arrive at a TP of INR680. We reiterate our BUY rating on the stock.