PepsiCo's Second Largest Bottling Company Stock Is a Multibagger To Rise Upto 355.85% In 3 Years

The share price of Varun Beverages Limited has grown phenomenally by upto 355.85% in last three years to Rs 1349 per share. Even over a year it has rallied by upto 118.6%. Sharekhan, a leading brokerage has retained a positive stance on this PepsiCo's Second Largest Bottling Company, as it believes it will potentially grow by upto 24%.

Sharekhan did a coverage report on Varun Beverage s Limited after the interaction with the management of the company. In the coverage report, the brokerage highlighted that management was optimistic about achieving strong revenue growth in the upcoming summer season as inventory created for the summer season has already been exhausted. This might lead to higher volume growth compared to the company's near aspiration in Q1CY2023 and Q2CY2023.

As per the report, Varun Beverages Limited has a 34% market share in overall India. Along with capacity expansion, the company is also focusing on strengthening its Go-To-Market, logistics, and in-outlet management to penetrate deep into the key markets to improve market share. It has 2,500+ distribution vehicles, which it plans to double in the coming years.

The company is continuously evaluating a high demand region for strategic placement of vending machines and visi-coolers. Currently, over 9.25 lakh visi-coolers are being installed in various markets. The company has already reached 3 million outlets out of ~10 million outlets in India. The focus is to expand the reach by 10% every year.

Sharekhan's View:

The brokerage retains its positive stance with 24% upside on Varun Beverages Limited. The brokerage feels that the company's growth visibility has improved tremendously in the past five years with the addition of new territories in the domestic market and expansion in the international markets. "Along with a focus on investing in future growth pillars, the company has also maintained its thrust on rewarding shareholders with consistent dividend payout through strong cashflow generation. Driven by pan-India expansion of new product launches, finding foothold in newer markets coupled with capacity expansion and market share gains, we expect the company to deliver a solid 25% CAGR in EPS over CY2022- CY2024E. Thus, considering strong growth prospects and focus on enhancing shareholder value, we believe Varun Beverages Limited is a good fit for investors' portfolio at current valuations of 45x/36x its CY2023E/CY2024E earnings. We retain our Positive stance with a 24% upside."

The current market capitalisation of Varun Beverages Limited is Rs 89,164.83. The 52-week high of the stock is at Rs 1432.05 per share and 52- week low is Rs 594.30 per share. It has become a multibagger to grow exponentially by 355.85% in three years and 118.6% in one year.

Disclaimer:

The stocks have been picked from the brokerage report of Sharekhan, Greynium Information Technologies and the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.