Varun Beverages shares earn 'buy' call from Citi; 38% upside seen in multibagger stock

Despite the bullish call from Citi, Varun Beverages shares were trading in red today.

Citi has initiated a 'buy' rating on Varun Beverages with a target price of Rs 800, citing the company’s strong market position in India and significant growth opportunities in the soft drinks sector. The brokerage highlighted PepsiCo bottler's go-to-market (GTM) initiatives and its ability to create new product categories as key drivers of its expansion.

Additionally, Varun Beverages is expected to benefit from its expanding geographic reach, including access to new territories in Africa, which Citi views as a positive medium-term catalyst.

The international broking firm estimates revenue and EPS to grow at a compound annual growth rate (CAGR) of 23 percent and 29 percent, respectively, over CY23-26.

Despite the bullish call from Citi, Varun Beverages shares were trading in red today. At 9:29 am, the stock was down nearly 2 percent at Rs 577.70 on the National Stock Exchange (NSE). The counter has risen 16 percent year-to-date, in-line with 16 percent rise in benchmark Nifty 50 index.

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In the past 12 months, the stock has surged 56 percent, outperforming Nifty's returns of 30 percent during this period. The counter has seen some downturn lately, falling around 5 percent in the past month. This near term weakness can be attributed to profit-booking in the FMCG stock.

Varun Beverages is a beverage company that operates franchisee of PepsiCo. The company produces and distributes a range of carbonated soft drinks (CSDs), as well as a large selection of non-carbonated beverages (NCBs), including packaged drinking water sold under trademarks owned by PepsiCo.

The company recently announced that it will split its shares. In a regulatory filing, the company stated that its board has approved this decision to divide each Es 5 share into multiple shares with a new face value of Rs 2 each.

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