Varun Beverages Share Price Surge 1000% in 6 years

Varun Beverages Share Price

Varun Beverages, one of PepsiCo’s major bottling companies outside the US, has shown a remarkable performance in the stock market.

Historically, whenever the company’s quarterly revenue has exceeded Bloomberg’s average analyst estimate, its shares have experienced significant jumps. This has been the case in 20 out of 23 instances.

Over the past six years, shares of Varun Beverages have surged by over 1,000 percent. This impressive growth has caught the attention of brokerage firms, and there is anticipation that the company’s upcoming results will further support its positive trajectory.

Despite this optimistic outlook, the stock has currently entered the red zone, experiencing a decline of 1.03 percent and closing at Rs 833 (Varun Beverages Share Price) on BSE.

Mirae Asset, a domestic brokerage firm, has noted that Varun Beverages has already surpassed its target price.

However, the firm still believes that the stock has the potential to climb further, projecting a potential increase of 15-20 percent from its current level.

It is important to note that stock prices can fluctuate based on various factors, including market sentiment and investor behavior. Investors should exercise caution and conduct thorough research before making any investment decisions.

Why the Brokerage Has So Much Faith in Varun Beverages

The brokerage firm, Mirae Asset Capital Markets India, holds significant faith in Varun Beverages for several reasons.

While the stock has experienced a decline from its one-year high of Rs 873.58 in May, mainly due to valuation concerns, it still trades at a relatively high forward 12-month price-earnings ratio of 50x.

In fact, among the world’s 15 largest beverage companies, Varun Beverages has the second most expensive valuation, with only Celsius Holdings being more expensive.

Despite the high valuation, Lavita Lassrado, an equity research analyst at Mirae Asset, believes that Varun Beverages still has the potential to climb 15-20 percent above its current levels.

AK Prabhakar, Head of Research at IDBE Capital Market Services, highlights the company’s success, attributing it to the widespread presence of PepsiCo products across the country.

Varun Beverages is responsible for bottling approximately 90 percent of PepsiCo’s products in India, giving it a significant advantage.

Furthermore, Varun Beverages is expanding its distribution network to reach remote areas of the country, which is expected to benefit the company.

Analysts also note that the increasing heat in the region is likely to boost beverage sales. Lavita expects the upcoming quarter to be exceptional for Varun Beverages, emphasizing that the company’s growth is organic, and it has been consistently expanding its capacity.

The recent months have witnessed increased sales of beverages as the temperature soared to 46 degrees Celsius in certain areas. This favorable climate has contributed to the company’s positive outlook.

While the valuation concerns and competitive landscape pose certain risks, the brokerage firm remains optimistic about Varun Beverages’ growth prospects and believes that the company’s strategic advantages and market presence will drive its future success.

The Company Has a Record of Defying Estimates

Varun Beverages has built a reputation for defying estimates and impressing investors with its financial performance.

The company has demonstrated this trend consistently, as evidenced by the shares of Varun Beverages jumping after the release of its quarterly results.

Out of the 23 instances where the company’s quarterly revenue exceeded Bloomberg’s average analyst estimate, shares have experienced significant upward movements in 20 instances.

This track record indicates that Varun Beverages has consistently outperformed market expectations, demonstrating its ability to generate strong financial results.

Investors have reacted positively to these favorable outcomes, leading to notable increases in the company’s share price.

On average, after the release of its results, Varun Beverages’ shares have strengthened by approximately 7.4 percent within a month.

This indicates that investors have recognized and rewarded the company’s robust performance, resulting in an upward trajectory for the stock.

Such consistent outperformance and positive market reactions highlight the market’s confidence in Varun Beverages and its ability to deliver strong financial results.

However, it’s important for investors to conduct thorough analysis and consider various factors before making investment decisions.

While past performance can provide valuable insights, future outcomes may vary and depend on multiple market dynamics.