Pepsi-bottler Varun Beverages has impressed the Street with another strong quarter of numbers. It has doubled investors' wealth in the past one year and the rally is not slowing down anytime soon.
At 11 am, Varun Beverages was quoting at Rs 1,294.40 apiece on the National Stock Exchange, up 5.94 percent. The stock saw buying interest after the company reported 150.2 percent year-on-year growth in net profit at Rs 81.5 crore for Q4 CY2022, which is a seasonally weak quarter.
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Revenue from operations grew 27.7 percent YoY to Rs 2,214 crore, while sales volumes grew 17.8 percent to 132 million cases. EBITDA (earnings before interest, taxes, depreciation and amortization) increased by 48.1 percent YoY to Rs 307.5 crore.
Margins improved by 192 basis points to 13.9 percent. One basis point is one-hundredth of a percentage point.
The star performer again was the energy drink Sting. Its contribution to topline reached 16 percent in the December quarter and 10 percent for the whole calendar year.
Net realisation for the company increased by 6 percent to Rs 164, on back of price hike in select SKUs, rationalised discounts, and improvement in mix of smaller SKUs (250ml) especially Sting.
Also Read: Varun Beverages: Is there some fizz left, post the rally?
Brokerages continue to see more upside for the stock. Nuvama Institutional Equities has a Buy rating on the stock with target price of Rs 1,512 apiece. "We increase our CY23, CY24 net profit estimate by 16 percent, 14 percent respectively. The initiatives on the food side, while small, presents an option value," the firm believes.
Domestic brokerage firm Motilal Oswal Financial Services, too, has Buy rating with a target of Rs 1,550. Increased penetration in newly acquired territories of South and West India, higher acceptance of newly launched products and growing refrigeration in rural and semi-rural areas are some positive triggers for the stock, it said.
The management also remains bullish on future growth prospects. It has guided for net capex of ~Rs 1500 crore in CY23 against earlier target of Rs 1,200 crore.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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