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Buy Stock Of PepsiCo's Bottling Company For High Return, Stock Up 623% In 5 Yrs
The Indian energy and sports drinks market is expected to witness ~13.3% CAGR during CY22-CY27. From the said sector, Motilal Oswal, a leading brokerage firm suggests buying the stock of Varun Beverages for high returns. The stock rallied by above 623% in the last 5 years. VBL is the 2nd largest bottling company of PepsiCo's beverages globally, outside the United States.
Stock To Buy: Target Price
The Current Market Price (CMP) of Varun Beverages is around Rs. 7,336. Motilal Oswal has estimated a Target Price for the stock at Rs. 8,250. This stock has the potential to give an 18% return, in the upcoming 1 year. It is a large-cap stock with a market capitalization of around Rs. 69,394 crore.
| Stock Outlook | |
|---|---|
| Current Market Price (CMP) | Rs. 1045 |
| Target Price | Rs. 1230 |
| Potential 1 year return | 18.00% |
| 52 week high share price | Rs. 1,194.70 |
| 52 week low share price | Rs. 539.20 |
Recent launch - growth momentum
VBL's newly launched segments - energy drink, dairy beverages and juices are registering strong growth v/s existing product segments. The company entered into the energy drink segment in CY17 with the launch of Sting in India. It is performing very well with 2.9x YoY volume growth and contributing ~7.2% of its total domestic sales volumes in 1HCY22. The contribution from this segment to overall VBL's portfolio has been moving up since the launch. VBL is already selling Sting in the overseas markets.
Stock Upside - outlook and value
Giving a buy rating to the stock, Motilal Oswal stated, "We expect VBL to maintain its earnings momentum going forward, energized by increased penetration in the newly acquired territories of South and West India, higher acceptance of newly launched products, and growing refrigeration in rural and semi-rural areas. We expect a revenue/EBITDA/PAT CAGR of 21%/26%/41% over CY21-24, respectively. We value the stock at 41x CY24E EPS to arrive at our target price of Rs. 1,230."
Disclaimer
The above stock was picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.
