Varun Beverages (VBL), one of the leading franchise bottlers of PepsiCo, presents an attractive investment opportunity following the recent stock price correction.Shares Of Varun Beverages Surges 5% to ₹534 apiece as of 12:23 PM on Tuesday as DAM Capital has reiterated its "Buy" rating on the stock, setting a target price (TP) of ₹670. The brokerage believes that the current dip provides a lucrative entry point for investors, given the company's strong growth prospects.
Here's What DAM Capital Says on Varun Beverages Ltd
Key Growth Drivers
1. Prolonged and Intense Summer to Boost Demand
With India expected to witness an extended and more intense summer this year, beverage consumption is likely to surge. Varun Beverages, being a key player in the carbonated and non-carbonated drinks segment, is well-positioned to capitalize on this seasonal uptick. Increased demand for cold beverages is expected to significantly drive sales volume growth in the coming quarters.
2. 20% YoY Capacity Expansion
To meet the growing demand, VBL has expanded its production capacity by 20% YoY. This strategic move will allow the company to serve a larger customer base and improve supply chain efficiency, ensuring that it can meet the anticipated surge in demand without any bottlenecks.
3. Strong Revenue Growth Outlook
DAM Capital projects a 19% CAGR sales growth over CY24-26E, reflecting VBL’s strong positioning in the market. This growth will be driven by:
a)Higher volume offtake due to the extended summer season.
b)Increased distribution reach and improved penetration in rural and semi-urban areas.
c)Expansion into newer categories and regions to diversify its product portfolio.
Varun Beverages' recent stock correction offers a compelling entry point for investors. With favorable weather conditions, capacity expansion, and strong growth projections, the company is well-placed to deliver solid financial performance in the near term. DAM Capital’s target price of ₹670 reflects confidence in the stock’s upside potential. Investors looking for growth in the FMCG and beverage sector may find VBL a strong addition to their portfolio.
Disclaimer:
The information provided in this article is for informational purposes only and does not constitute financial advice. All investment decisions should be made based on your own research and in consultation with a qualified financial advisor. Neither the author nor the publisher accepts any liability for any loss or damage incurred as a result of the use of this information.
