Buy Varun Beverages, target price Rs 1140: Motilal Oswal

Motilal Oswal has buy call on Varun Beverages Ltd. with a target price of Rs 1140. The current market price of Varun Beverages Ltd. is Rs 994.4.

Varun Beverages Ltd., incorporated in the year 1995, is a Large Cap company (having a market cap of Rs 28613.38 Crore) operating in FMCG sector.

Financials
For the quarter ended 31-12-2020, the company reported a Consolidated Total Income of Rs 1336.46 Crore, down -26.00 % from last quarter Total Income of Rs 1806.11 Crore and up 6.39 % from last year same quarter Total Income of Rs 1256.23 Crore. Company reported net profit after tax of Rs -7.24 Crore in latest quarter.


Investment Rationale
The brokerage expects strong demand traction over the next few years due to: a) VBL is a monopoly play in PepsiCo India’s business, as the market increased to ~85%, b) increasing penetration in the newly acquired regions (South and West India) on the back of a robust distribution network, c) diversifying product portfolio, and d) greater Refrigerator penetration in rural/and semi-rural areas.

Promoter/FII Holdings
Promoters held 66.4 per cent stake in the company as of Dec 30, 2020, while FIIs held 20.5 per cent, DIIs 5.9 per cent and public and others 7.3 per cent.