Add Varun Beverages, target price Rs 1030: ICICI Securities

ICICI Securities has add call on Varun Beverages with a target price of Rs 1030. The current market price of Varun Beverages Ltd. is Rs 986.05. Time period given by analyst is one year when Varun Beverages Ltd. price can reach defined target.

Varun Beverages Ltd., incorporated in the year 1995, is a Large Cap company (having a market cap of Rs 42904.92 Crore) operating in FMCG sector.

Varun Beverages Ltd. key Products/Revenue Segments include Beverages, Other Operating Revenue, Other Services for the year ending 31-Dec-2020.



Financials
For the quarter ended 31-12-2021, the company reported a Consolidated Total Income of Rs 1735.19 Crore, down -29.96 % from last quarter Total Income of Rs 2477.37 Crore and up 29.83 % from last year same quarter Total Income of Rs 1336.46 Crore. Company reported net profit after tax of Rs 32.59 Crore in latest quarter.

Investment Rationale
The brokerage models Varun to report revenue and PAT CAGRs of 13.8% and 29.3%, respectively, over CY21-CY23E, and have return ratios in excess of cost of capital. It continues to benefit from its relationship with PepsiCo, pan-India distribution, backward integration, and increase in in-home consumption. It maintains ADD rating on the stock with a revised DCF-based target price of Rs1,030 (38x CY23E). Key risks: Steep rise in competitive pressures/ delay in launch of new products and higher raw material prices.

Promoter/FII Holdings
Promoters held 64.89 per cent stake in the company as of 31-Dec-2021, while FIIs owned 21.23 per cent, DIIs 7.05 per cent.