This Large Cap Stock Is Top Pick, Recommended Dividend, Buy For High Returns, Says Axis Securities

Axis Securities has maintained its bullish outlook on Varun Beverages Ltd (VBL), recommends buy. The brokerage has assigned a target price of Rs 1500/share on the stock of VBL. It sees a potential upside of up to 16% if you purchase the stock at the current market price today. It is a large cap Beverage sector stock having a market capitalisation of Rs 83,977.02 crore.

Stock Outlook - CMP, 2 Week Low/High, Returns

The stock is currently trading at Rs 1,294/share. Its 52 week low is Rs 583.60/share and 52 week high is Rs 1,432.45/share, respectively.

The stock has given 4.71% positive return in 1 month, and 12.95% in 3 months, respectively. It gained 109.36% in 1 year, 258.1% in 3 years and 579.07% in 5 years, respectively.

 

Recommended Dividend

The Board of Directors of Varun Beverages on February 6, 2023, in its regulatory filing said, "Recommendation of final dividend of Re. 1 (Rupee One only) per Equity Share of the nominal value of Rs. 10/- each for the Financial Year ended December 31, 2022 to the shareholders of the Company on a Record Date to be fixed after taking approval of the shareholders at the ensuing AGM of the Company."

 

Latest Quarterly Performance (Q4CY22)

According to Axis Securities, VBL delivered robust all-round performance in Q4CY22, led by strong volume, and realization growth across regions and markets as the company continued its distribution expansion, strong traction from newly acquired territories (south and west) and scaling up of Sting energy drink. Despite raw material inflation, gross margins improved on account of early stocking of key raw materials, selective price hikes, rationalization of discounts, and improved realization led by higher salience of the high-margin Sting portfolio. EBITDA margins improved on strong operating leverage benefits.

 

Outlook

Axis Securities said, "We believe VBL is well placed under current market situation as early onset of summer season is expected to drive overall beverage sales across regions. Further, initial report on possible El-nino (deficit rainfall) could delay the rural recovery which would led the entire FMCG pack (ex-ITC) under wait-and-watch mode. Hence, in this current volatile market situation we expect VBL along with ITC (firing on all cyclinder) provides better earning visibility than other FMCG peers in the near term."

Buy For a Target Price of Rs 1,500/share

Axis Securities said, "VBL has been in our Top Picks portoflio since long and we continue to remain positive on the stock on a mid to long term basis. We estimate revenue/EBITDA/PAT CAGR of 17%/21%/25% over CY22-24E based on the above mentioned rationales."

It added, "We maintain our BUY rating on the stock with the revised TP of Rs 1,500/share (40x CY24EPS) vs earlier TP of Rs 1,450/share (38x CY24 EPS) implying an upside of 15% from CMP."

Disclaimer

The stock has been picked from the brokerage report of Axis Securities. Greynium Information Technologies, 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.