Varun Beverages Ltd. share price target

Highlights: (1) Continued buoyant margin performance led by lower input prices, higher realisation and benefits of strategic cost-saving initiatives undertaken, (2) international business strengthened further, following the acquisition of BevCo (South Africa and surrounding region) and agreement signed for manufacturing of snacks from May’25 in Morocco market,

With a 18% upside potential from the CMP, we maintain our BUY rating on the stock.

Quarterly Update Q4FY24

Varun Beverages (VBL) reported a revenue growth of 11% YoY in 1QCY24,
led by volume growth (up 7% YoY) and high realization (up 4% YoY to
INR180/case).

We maintain a Buy rating for VBL, with a target price of Rs 1550 per share, representing a potential upside of 11% from the current market price

Varun Beverages Limited (VBL) continued to see strong growth in CY23, despite the impact of unseasonal rains during peak season. Net revenue from operations grew by 21.8% YoY, backed by volume growth of 13.9% YoY and realization per case growth of 7.0% YoY.

For Q4CY23, VBL continued its strong revenue traction and reported a revenue net of excise of INR 26,677 Mn, a growth of 20.5% YoY. The YoY growth was supported by strong double-digit volume growth (+18.0% YoY) and realization improvement (+1.9% YoY). Revenue declined by 31.1% QoQ due to seasonality, with volumes declining by 29.1% QoQ and net realization declining by 2.8% QoQ.

We believe VBL is expected to continue its strong growth momentum and we maintain our BUY recommendation on the stock.

Quarterly Update Q3FY24