KR Choksey's research report on Varun Beverages
VBL showcased a healthy performance in Q3CY24 results, which outperformed our estimates across the board. Consolidated revenue stood at INR 48,047 Mn, grew by 24.1% YoY, outperformed our estimate by 3.6%. The revenue growth was driven by expanded distribution network, increased product penetration and favorable demand trends in key markets. EBITDA reached to INR 11,511 Mn, grew by 30.5% YoY, bet our estimate. The growth was led by better operating performance. The corresponding EBITDA margin improved by 117 bps YoY to 24.0%. PAT stood at INR 6,196 Mn, reporting a growth of 23.7% YoY, which surpassed our estimate. Mainly due to better operating performance and lower than expected tax expenses.
Outlook
We maintain our CY26E Adj. EPS, mainly due to strong revenue growth, geographic expansion, and cost efficiencies. We re-iterate our BUY rating, valuing the company with a maintained PE multiple of 57x on a CY26E EPS of INR 12.9. Consequently, we arrive at a target price of INR 738, indicating an upside of 24% from the CMP.
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