Varun Beverages: Motilal Oswal Raises Price Target to Rs 550
Varun Beverages Limited (VBL) Financial Report
CY25 Performance
Varun Beverages Limited's consolidated business witnessed a modest volume growth of 8% in CY25, with India experiencing a growth of 2%. Realizations remained flat during this period. The subdued growth can be attributed to unusually heavy rainfall, which led to weak beverage consumption.
Long-term Growth Drivers
Despite the short-term challenges, the company's long-term growth story remains intact. Key drivers include:
- Retail expansion: Expanding distribution network to cater to growing demand
- Improved electrification: Enhancing cold-chain infrastructure to support beverage distribution
- Portfolio diversification: Expanding product offerings to adjacent consumer products
- Expansion into adjacent consumer products: Scaling across multiple product categories
- Stronger coldchain infrastructure: Vertically integrating cold-chain capabilities through manufacturing visi-coolers
Strategic Developments
- Carlsberg partnership: Potential entry into beer in select African markets
- Manufacturing capacity expansion: Commissioning of four new plants to support growth
- New product launches: Introducing health-focused offerings to expand portfolio
Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data
Outlook
We expect 13%/13%/16% growth in revenue/EBITDA/PAT CAGR over CY25-27. Our research team maintains a BUY rating for the stock with a target price of INR550 (45x CY27E EPS).
Investor Takeaway
Investors should consider Varun Beverages Limited for long-term growth opportunities.
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