Varun Beverages Ltd. share price target

About the stock: Varun Beverages is one of the largest franchisee of PepsiCo in the The company has operations in India (except Andhra Pradesh, J&K & Ladakh), Sri-Lanka, Nepal, Morocco, Zambia & Zimbabwe...

Based on our channel checks, we believe Varun Beverages is likely to maintain strong double-digit volume growth, in line with earlier quarters. It has not yet raised prices of its products in spite of inflation in key raw materials such as sugar and PET (packaging material). It plans to focus on Eastern states and is on track to set up a new plant in Bihar. We also believe lockdown (if any) would likely have a negligible impact on the company’s sales as the lockdown is likely to be in Q1CY22 (non-season).

VBL posted robust volume growth, supported by growing out-of-home' consumption. The company reported a stable operating performance, despite rising input cost, due to an improvement in realization, benefitting from operating leverage and passing-on of RM prices. We maintain our earnings estimate for CY22E/CY23E, as the growth trajectory is expected to continue with the opening of business operations and traveling activities, coupled with strong support from newly launched products. We maintain our Buy rating with a TP of INR1,210 per share....

globally. The company produces & distributes carbonated drinks, juices & packaged drinking water in six countries including India. Some of the PepsiCo brands produced by VBL include Pepsi, Diet Pepsi, Seven-Up, Mirinda, Mountain Dew, Nimbooz, String, Slice, Tropicana, Aquafina among others. The company has operations in India (except Andhra Pradesh, J&K; and Ladakh), Sri Lanka, Nepal, Morocco, Zambia and Zimbabwe...

In May'19, VBL acquired the franchisee rights to seven states Gujarat, parts of Maharashtra, parts of Karnataka, parts of Telangana, parts of Andhra Pradesh, Kerala, and Tamil Nadu in South and West India from PepsiCo. Prior to the acquisition, PepsiCo's market share had dropped over CY16-19 and penetration levels in the region were low. The management aims to improve distribution and penetration levels in the region. However, its expansion plans were hampered due to the onset of the COVID-19 outbreak....

Sharp volume growth on strong recovery and lower base Motilal Oswal values your support in the Asiamoney Brokers Poll 2021 for India Research, Sales, Corporate Access and...

At CMP, the stock trades at 14.7x EV/EBITDA CY23E which is attractive in our view. Maintain a BUY rating with a revised TP of Rs 900/share. Key Risks to our call are a) Resurgence of covid-19 cases, b) Likelihood of the 3rd wave and consequent lockdowns, and c) Sudden spike in RM prices.

Varun Beverage Limited (VBL) is the second largest franchisee in the world (outside US) of carbonated soft drinks (CSDs) and non-carbonated beverages (NCBs) sold under PepsiCo's trademarks.

With the increase in crude prices, PET resin prices have also gone up sharply in the last three months. Further, we expect sugar prices to increase ~15% in next one year. We believe these commodity prices would remain firm for a prolonged period of time, which would require certain amount of price hikes. However, we believe it would not be easy to take prices hikes given aggressive competition. Hence, we believe operating margins would remain under pressure. We expect 19.8%, 20.1% operating margins for CY021E,...

Varun Beverages (VBL) reported a strong operating performance on the back of higher volume growth across the Carbonated Soft Drinks (CSD) and NonCarbonated Beverages (NCB) segments. Volumes increased 32% YoY to 151m unit-cases. This was primarily led by an increase in out-of-home...