Axis Securities Equal Weight on Varun Beverages, target price Rs 600

Axis Securities has an equal weight call on Varun Beverages with a target price of Rs 600. The current market price of Varun Beverages is Rs 481.25. Varun Beverages, incorporated in 1995, is a Large Cap company with a market cap of Rs 163343.84 crore, operating in the FMCG sector.

Varun Beverages' key Products/Revenue Segments include Beverages, Other Operating Revenue, Other Services for the year ending 31-Dec-2023.



Financials
For the quarter ended 31-12-2024, the company has reported a Consolidated Total Income of Rs 3733.43 crore, down -22.69% from last quarter Total Income of Rs 4828.93 Crore and up 39.47 % from last year same quarter Total Income of Rs 2676.80 crore. The company has reported net profit after tax of Rs 196.33 crore in latest quarter.

The company's top management includes Mr.Ravi Kant Jaipuria, Mr.Varun Jaipuria, Mr.Raj Pal Gandhi, Mr.Rajinder Jeet Singh Bagga, Mr.Abhiram Seth, Mr.Anil Kumar Sondhi, Ms.Sita Khosla, Dr.Ravi Gupta, Ms.Rashmi Dhariwal. Company has O P Bagla & Co. LLP as its auditors. As on 31-12-2024, the company has a total of 338 Crore shares outstanding.


Investment Rationale
Varun beverages is set to sustain its strong growth momentum, supported by key strategic initiatives: 1) The acquisition of BevCo, strengthening its presence in South Africa and DRC; 2) Expansion of its snacks portfolio beyond India, targeting markets like Zimbabwe and Zambia; 3) A focused push to widen its distribution network, especially in rural areas; 4) Commissioning of greenfield and brownfield facilities to enhance manufacturing capacity, expand market reach, and optimise logistics costs; and 5) Scaling up its high-margin Sting energy drink while increasing focus on value-added dairy products, sports drinks (Gatorade), and juice offerings. These initiatives are expected to drive long-term growth and profitability. Axis Securities expects revenue/EBITDA/PAT to grow at 23%/25%/33% CAGR over CY24-27E.

Promoter/FII Holdings
Promoters held 60.2 per cent stake in the company as of 31-Dec-2024, while FIIs owned 25.27 per cent, DIIs 6.95 per cent.