Motilal Oswal's research report on Varun Beverages
VBL's newly launched segments - energy drink, dairy beverages and juices are registering strong growth v/s existing product segments. The company has entered into the energy drink segment in CY17 with the launch of Sting in India, thereby competing with global players. The contribution from this segment to overall VBL's portfolio has been moving up since the launch. The Indian energy and sports drinks market is expected to witness ~13.3% CAGR during CY22-CY27. The energy drink 'Sting' has been performing very well for VBL with 2.9x YoY volume growth and contributing ~7.2% of its total domestic sales volumes in 1HCY22. Coca-Cola's 'Charged' is the major competitor of 'Sting' with both companies targeting the lower end of the price range in the domestic energy drink market.
Outlook
We expect a revenue/EBITDA/PAT CAGR of 21%/26%/41% over CY21-24, respectively. We value the stock at 41x CY24E EPS to arrive at our TP of INR1,230. We maintain our BUY rating on the stock.
More Info
At 16:01 hrs Varun Beverages was quoting at Rs 1,069.00, up Rs 24.15, or 2.31 percent.
It has touched an intraday high of Rs 1,093.00 and an intraday low of Rs 1,025.50.
It was trading with volumes of 91,718 shares, compared to its thirty day average of 87,009 shares, an increase of 5.41 percent.
In the previous trading session, the share closed down 4.08 percent or Rs 44.40 at Rs 1,044.85.
The share touched its 52-week high Rs 1,194.80 and 52-week low Rs 539.07 on 22 September, 2022 and 25 October, 2021, respectively.
Currently, it is trading 10.53 percent below its 52-week high and 98.3 percent above its 52-week low.
Market capitalisation stands at Rs 69,436.85 crore.
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