Shares of Varun Beverages Ltd are reeling under a short-term correction. The FMCG stock is down 21% this year and fallen 8% in a year. The stock has been falling since Q4 earnings of the firm were announced on February 10. In the current session, Varun Beverages stock ended 4.02% lower at Rs 513.10 against the previous close of Rs 534.60. The stock hit a 52-week low of Rs 511.15 in the current session. This is the second time, Varun Beverages shares hit a 52-week low in the last three sessions. On February 10, the stock fell to a yearly low of Rs 511.45 on BSE.
A total of 4.39 lakh shares of the firm changed hands, amounting to a turnover of Rs 22.84 crore. Market cap of the firm slipped to Rs 1.73 lakh crore.
The multibagger stock fell 8% in a year but zoomed 100% in two years.
In terms of technicals, the relative strength index (RSI) of Varun Beverages stands at 39.8, signaling the stock is trading neither in the overbought nor in the oversold zone.
Varun Beverages shares are trading lower than the 5 day, 10 day, 20 day, 30 day, 50 day, 150 day and 200 day moving averages. The stock has a beta of 0.9, indicating very low volatility in a year.
Brokerage Nuvama has assigned a buy call with a price target of Rs 520.
"We like VBL’s aggression towards expanding distribution reach and expanding international operations. We are tweaking CY25E/26E EPS by 3.4%/(5.7%), yielding a target price of Rs 659 (earlier Rs 688). Retain ‘BUY’. We shall watch out for Campa’s scale over the next two–three years," said Nuvama.
Emkay Global is bullish on the FMCG stock.
"We stay constructive, baking in the strong execution, on-the-ground strengths, and capital investments. The brokerage has retained BUY call with unchanged price target of Rs 800 (60x Dec-26E EPS). Key risk for the stock is aggressive price wars," said the brokerage.
"Q4 EBITDA was largely in-line. Revenue grew 38% in Q4, helped by 9-10% organic growth in the India/International business, with the rest aided by consolidation of the DRC/South Africa business. Despite the rising competition in India, VBL is confident of delivering double-digit volume growth in the near term," added Emkay Global.
Axis Securities has maintained its buy call on the stock with a target price of Rs 710. The brokerage said growth story of the firm remains intact.
"We expect the firm to continue its strong growth momentum in the mid- to long-term. Hence, we maintain our BUY recommendation on the stock," said the brokerage.
"VBL is expected to maintain its strong growth momentum driven by several key factors: 1) The successful strategic acquisition of the BevCo, which consolidates its presence in South Africa and DRC; 2) Expansion of its snacks portfolio outside India, particularly in Zimbabwe and Zambia; 3) Continued focus on increasing distribution reach, especially in rural areas; 4) The commissioning of multiple greenfield and brownfield facilities, enhancing manufacturing capabilities and market reach while reducing transportation costs; and 5) Expansion of the high-margin Sting energy drink, along with increased emphasis on value-added dairy, sports drinks (Gatorade), and juice segments," added the brokerage.
Motilal Oswal reiterated its BUY rating on the stock noting that the management has guided to continue this growth momentum with double-digit volume growth in the domestic market and a much higher growth rate in international markets.
It expects a CAGR of 12%/11%/17% in revenue/EBITDA/PAT over CY24-26 and largely maintained CY25/CY26 earnings estimates. It has price target of Rs 680 on the stock.
Varun Beverages is a beverage company. It operates franchisee of PepsiCo. The company produces and distributes a range of carbonated soft drinks (CSDs), as well as a large selection of non-carbonated beverages (NCBs), including packaged drinking water sold under trademarks owned by PepsiCo.