6 VBL share price target reports by brokerages below. See what is analyst's view on VBL share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
The company was witnessing stronger organic growth in the business before it was hit by lockdown across its operating countries due to Covid-19 pandemic. We believe unlike other FMCG companies, the company would be severely impacted by the lockdowns given manufacturing & supply chain has been completely derailed. Moreover, it also does not have A&P lever to reduce the cost at the time of crisis to protect margins. Though the management is confident of maintaining operating margins, we believe the recovery would be painful & prolonged.
Although Varun Beverages Limited (VBL) performance in Q1CY20 was better than our estimates on topline/bottomline we note that Q2CY20 (~40% sales) could be severely impacted given the rapidly evolving situation on ground and sharp impact of 10 days lockdown on organic volumes which declined by 13.7% YoY in Q1CY20. However, outlook on profitability improved given lower RM prices (PET resin and sugar). For Q1CY20, VBL reported robust 280bps Gross Margins expansion to 58.8% (55.5% our estimate). EBITDA Margins stood at 16.2% largely in-line with our estimates. Reported PAT stood at Rs. 60cr up 53% YoY due to tax write back. From a long term perspective however we remain positive given VBLs execution capabilities, opportunity for share gains from newly acquired territories, margin improvement and relatively better balance sheet position. Although we cut estimates for CY20/21E on Revenue/PAT by 8%/5% and 7%/4% respectively we retain BUY recommendation with TP of Rs. 804/share continuing to value it at 13x EV/EBITDA.
We believe strong organic growth in the last couple of quarters allays concerns regarding the soft drink industry in India. Additionally, the company’s focus on healthier options would help drive incremental volumes and margins. As volume growth picks up in new territories and the company participates in the manufacturing segment of Tropicana, we expect revenue & earnings CAGR of 20.2% & 28.9% in CY18-21E, respectively. We value VBL at 35x CY21E earnings. We upgrade our recommendation to BUY with a revised target price of Rs 805/share.
We believe strong organic growth in the last couple of quarters allays concern regarding the soft drink industry in India. Additionally, thecompany’s focus towards healthier options would help drive incremental volumes and margins. As volume growth picks up in new territories and the company participates in the manufacturing segment of Tropicana, we expect revenue & earnings CAGR of 21.5% & 25.5% in CY18-21E respectively. However, the stock is richly valued at 12.5x EV/EBITDA on CY21E. Hence, we maintain HOLD with a target price of Rs 693/share.
We remain positive on VBL as it is continuously looking for newer territories to expand its base in untapped geographies. It remains a proxy play on the soft drink industry in India. We expect revenue and PAT to grow at a CAGR of 21.1% and 26%, respectively, in CY18-21E. As volume growth picks up in new territories and the company participates in the manufacturing segment of Tropicana, the EBITDA margin is expected to improve to 18.7% in CY21E. On earnings visibility and expected improvement in return ratios, we increase our target price to | 1040/share.
We remain positive on VBL as post acquisition it would be contributing more than 80% of the Pepsi’s volumes in India. Simultaneously, it would be able to sustain the volume growth by increasing contribution of juices from the upcoming facilities. However, the increasing debt & equity dilution would be a drag on return ratios in the near term. We maintain our target price at Rs 860/share with a HOLD rating on the stock.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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