ICICI Direct is bullish on Varun Beverage has recommended buy rating on the stock with a target price of Rs 840 in its research report dated May 04, 2018.
ICICI Direct's research report on Varun Beverage
Revenues witnessed growth of 6.8% (24.5% growth on a comparable basis) to Rs 1122.3 crore (I-direct estimate Rs 1244.8 crore) led by 19.7% volume growth on the back of territory acquisition in Madhya Pradesh and Odisha last year. The company reported organic volume growth of 12% in the quarter Operating profit grew 25.8% to Rs 172.7 crore vs. Rs 137.2 crore in the corresponding quarter. Operating margins improved 20 bps to 15.8%. Q1 is a seasonally lean quarter for the company. Net profit during the quarter was at Rs 19.7 crore (I-direct estimate: Rs 34.5 crore) against Rs 6.9 crore net profit in the corresponding quarter.
We remain positive on Varun Beverages as the company is continuously looking for newer territories to expand its base in untapped geographies and remains a proxy play on the soft drink industry in India. We expect revenue, PAT to grow at a CAGR of 17.8%, 38.2%, respectively, in CY17-19E with an operating margin of 21.6% in CY19E. With the comfort of earnings visibility and expected improvement in return ratios, we maintain our target price at Rs 840/share.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.