In early trading on the BSE, Varun Beverages shares surged by 5.16% to ₹625 following the company's Q3 financial results. The company's market capitalisation increased to ₹2 lakh crore after it announced a significant rise in its net profit for the September 2024 quarter. Varun Beverages, which operates as a bottler for PepsiCo, posted a 22% increase in net profit, with its earnings meeting street estimates. Investors looking to buy shares online can take note of this recent stock movement.
Brokerages revise price targets after Q3 results
Several brokerages have adjusted their price targets for Varun Beverages following its Q3 earnings announcement. Nuvama lowered its target price for the stock to ₹688 from the earlier figure of ₹741. The firm stated that the proceeds from the planned Qualified Institutional Placement (QIP) of ₹7,500 crore would be directed towards debt reduction, acquisitions, and capacity expansion within India.
While maintaining a 'Buy' rating, Nuvama cut the target price due to anticipated disruptions from Campa Cola and a high base in Q4CY24. For investors looking to buy shares online, it's crucial to consider these revised valuations.
ICICI Securities maintains a hold rating with an updated target
ICICI Securities has upheld its 'Hold' rating on Varun Beverages, maintaining a target price of ₹606. The brokerage's target is based on a discounted cash flow (DCF) model, adjusted for the company's recent 2:5 stock split. This implies a P/E ratio of 62x for CY25 and 49x for CY26 estimates. ICICI Securities expects Varun Beverages to deliver a compound annual growth rate (CAGR) of 21.8% for revenue. Investors who frequently buy shares online may view this valuation as stretched but can still find growth prospects in the company's future performance.
Varun Beverages reports strong Q3 earnings
In Q3 of the fiscal year, Varun Beverages saw a significant rise in its financials. The company reported a net profit of ₹628.82 crore, up from ₹514 crore in the September 2023 quarter. Revenue from operations surged 25.3% to ₹4,932 crore compared to ₹3,937.7 crore in the same period last year.
Earnings before interest, taxes, depreciation, and amortisation (EBITDA) also rose, showing a 30.5% increase to ₹1,151 crore, compared to ₹882.1 crore in Q3 of the previous year. For those looking to buy shares online, these financial results highlight Varun Beverages' continued growth in the beverage sector.
Board of Directors approves QIP worth ₹7,500 crore
In a move aimed at enhancing the company's financial position, Varun Beverages' Board of Directors has approved raising funds through the issuance of equity shares amounting to ₹7,500 crore via a Qualified Institutional Placement (QIP). These funds will be used for debt reduction, acquisitions, and expanding the company's capacity within India.
The issuance is subject to shareholder approval. For investors who buy shares online, this could signal long-term growth prospects for Varun Beverages, supported by strategic financial decisions.
Varun Beverages' business operations
Varun Beverages operates as a franchisee bottler for PepsiCo, producing and distributing a range of beverages, including carbonated soft drinks (CSDs) and non-carbonated beverages (NCBs) such as packaged drinking water. These products are sold under PepsiCo-owned trademarks, and the company's operations are spread across various regions.
Investors interested in Varun Beverages may want to buy shares online to tap into the company's expanding market presence, particularly following its strong financial performance in Q3.
Brokerage views on future growth
While Varun Beverages continues to deliver strong financial results, brokerages have raised concerns about the company's current valuation. ICICI Securities, for example, has pointed out that while the company's growth prospects remain robust, the valuation appears stretched based on its current trading metrics. The brokerage projects Varun Beverages to report a 21.8% CAGR in revenue and a 24.8% CAGR in PAT over CY23-26. Despite these concerns, the company's strong operational performance may still attract investors who regularly buy shares online.
Q3 results reflect robust revenue growth
Varun Beverages' Q3 results underscore its ability to generate consistent revenue growth. The company's revenue from operations rose by 25.3%, reaching ₹4,932 crore compared to ₹3,937.7 crore in the same quarter last year. This revenue increase was driven by higher demand for the company's beverage products, as well as improvements in its distribution capabilities. Investors seeking to buy shares online may find this revenue growth an encouraging sign for Varun Beverages' long-term potential.
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