Varun Beverages Ltd (VBL) shares have climbed 7 per cent in the past one week, as the stock cut its year-to-date losses to 26.49 per cent. A couple of brokerages believe the recent correction on the counter amid concerns over aggressive pricing, distribution and marketing from Reliance's Campa is overdone. They believe the PepsiCo bottler stock has potential to deliver up to 49 per cent upside ahead.
Jefferies said its channel checks feedback is mixed, with the Campa brand gaining ground mainly against local and regional offerings. It said while it is closely monitoring developments, it find VBL share price correction exaggerated.
On Thursday, Varun Beverages shares rose 1.23 per cent to Rs 481.45. "Valuation at 45 times 1-year forward PE appears attractive in the context of growth, with a strong summer season as a key trigger," Jefferies said while suggesting a target price of Rs 715.
KRChoksey Shares and Securities said the company maintained 21 per cent India margin in 2024, while its international margins, especially in South Africa, are expected to improve in 2025 with backward integration.
It expects revenue, Ebitda and adjusted PAT to grow 22.1 per cent, 23.2 per cent and 27.9 per cent, respectively, annually, over 2024-26. "We apply a P/E multiple of 52 times on CY26E EPS of INR 12.6, resulting in a target price of Rs 657 per share. We have a ‘Buy’ rating on Varun Beverages Ltd since Feb 11, 2025," the brokerage said.
Axis Securities has VBL among its March picks. It said VBL is set to sustain its strong growth momentum, supported by key strategic initiatives including The acquisition of BevCo and strengthening its presence in South Africa and DRC. It sees expansion of its snacks portfolio beyond India, targeting markets like Zimbabwe and Zambia.
VBL is focused on widening its distribution network, especially in rural areas and commissioning of greenfield and brownfield facilities to enhance manufacturing capacity, expand market reach, and optimise logistics costs. This brokerage has a target of Rs 600 on the stock.