Varun Beverages stock price gained nearly 2% to Rs 839.5 today following its strong Q2CY23 performance. As a result of better international performance, Varun Beverages reported its EBITDA growth by 21% on-year, while EBITDA margins, at 26.9%, increased by 169 bps, which was led by higher operating efficiency measures. Varun Beverages share price has jumped over 3% in the last one month and over 35% in the last six months. Axis Securities and Emkay have recommended a ‘Buy’ rating on Varun Beverages stock, while ICICI Securities has recommended a ‘Hold’ rating.
Should you buy, sell or hold Varun Beverages?
Emkay
Buy | Target price : Rs 970
Axis Securities
Buy | Target price: Rs 920
“The company’s International business reported strong performance while India’s business got impacted owing to high unseasonal rainfall in North India. Despite this, its Gross and EBITDA margin expanded on account of lower PET prices and operational efficiencies. The company continues to maintain its growth momentum guidance for CY23, supported by its robust on-ground execution, expanding manufacturing capacities, and increasing distribution reach. We maintain our BUY recommendation based on the above mentioned thesis, however, we cut our FY24-25 EPS marginally to account for higher Capex.”
ICICI Securities
Hold | Target Price: Rs 825
“The company has floated a new subsidiary to evaluate growth opportunities in South Africa. If the company is able to secure franchisee rights for South Africa, it will be a strong growth driver in the medium-long term. The company has commenced two greenfield plants at Rajasthan and Madhya Pradesh recently and plans to add three more plants at Maharashtra, Uttar Pradesh and Odisha. While we are structurally positive on Varun, we believe upside is limited at current valuations. Maintain HOLD.”