Shares of PepsiCo bottler Varun Beverages (VBL) jumped 5.5% on BSE today to the day’s high of Rs 1,558.45 after reporting an increase of 25% year-on-year (YoY) in March quarter PAT to Rs 548 crore. The brokerages have increased the target price for the stock post earnings announcement.The company’s revenue from operations in Q1 rose to Rs 4,398 crore, a rise of 11.2% YoY over Rs 3952.60 crore reported by the company in the corresponding quarter of the last financial year.Here’s how analysts view the future of the stock:Bank of AmericaBofA stated that the Q1 earnings beat expectations and the CY24 ahead looks strong for the company. Varun Beverages now gears up for the peak season and South Africa capacity is also expected to be ready before its peak season in the fourth quarter.The global brokerage firm has retained its buy rating on the stock and increased the price target to Rs 1,650.Motilal OswalAs VBL expects strong sales growth led by heat waves, elections, and lower base in the corresponding quarter, Motial Oswal expects the company to maintain its earnings momentum aided by increased penetration in newly acquired territories in India and Africa, higher acceptance of newly launched products, continued expansion in capacity and distribution reach, growing refrigeration in rural and semi-rural areas and a scale-up in international operations.It reiterated a ‘buy’ on the stock with a target price of Rs 1,750.Kotak Institutional EquitiesHeat waves, favorable base and expanded capacities position VBL to deliver about 30% domestic volume growth in 2Q. We estimate a 22% volume CAGR (17% organic) over CY2023-26E, driven by about 35% volume CAGR in the high-growth portfolio (Sting + Gatorade + Rockstar + Tropicana + Dairy) to about 30% of India volumes from 18%, 12% volume CAGR in the core portfolio in India and about 40% volume CAGR (17% organic) in the international portfolio, supported by the South Africa acquisition and organic expansion in the DRC, said a report by Kotak Institutional Equities.KIE has retained its ‘add’ rating with a target price of Rs 1,477.Nuvama“VBL posted Q1CY24 revenue/EBITDA/PAT growth of 11%/24%/25% YoY beating our estimates. Volume expanded 7.2% YoY driven by International (21.9% YoY); India volumes increased 4.4% YoY. Net realisation per case rose 3.5% to INR179.7. We expect Q2 to be very strong due to a harsh summer and a low base,” stated a Nuvama report.The brokerage firm has increased CY24E/25E EPS by 9%/9% factoring in improving rural demand in CY24, market expansion following the South Africa acquisition, higher realisation and improving operating leverage.Nuvama has maintained a ‘buy’ call on the stock while increasing the target price to Rs 1,690.Also reaD: Q4 results today: Bharti Airtel, Patanjali Foods among 97 companies to announce earnings on Tuesday(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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