Shares of Varun Beverages gained as much as 2 percent to Rs 465 in morning trade on June 27, snapping its two-day losing streak, after HSBC retained its buy rating, suggesting that the recent correction is unwarranted.
With a price target of Rs 670 per share, the international brokerage implies an upside potential of over 46 percent from the last closing price of Rs 458 per share on the NSE.
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HSBC analysts believe the 28 percent year-to-date drop in Varun Beverages is steep and likely overdone. They argue that concerns around bad weather and increased competition don’t fully justify the sharp correction. The stock, they note, is now trading at a 20 percent discount to the average P/E multiple of the broader consumer packaged goods (CPG) sector, offering a compelling valuation.
Pepsi India bottler Varun Beverages reported a 36 percent jump in net profit at Rs 196 crore for the quarter ended December 31, 2024, driven by volume growth and improved margins. It reported a net profit of Rs 144 crore in the year-ago period.
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Varun Beverages, which packages and distributes beverages under Pepsi, Mirinda and Tropicana labels, is expanding its presence in several African countries, including South Africa, Ghana and Tanzania, citing robust demand potential.
The growth has been driven by organic volume growth and improved product mix. India volumes grew 11.4 percent, reflecting a strong distribution network and operational execution. Consolidated volumes increased by 23.2 percent, largely led by new territories.
Varun Beverages' shares are down 14 percent in the last three months.
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