VBL Shares Hit 52-Week High Today After Profits Jump 69%, But This Analyst Isn't Impressed

Share price of Varun Beverages soared up over 4% on Tuesday to hit a new 52-week high of ₹1,529.30. However, analysts at ICICI Securities noted that at current valuation the upside in the stock is capped.

The VBL Analyst: The Aniruddha Joshi-led analyst team at ICICI Securities maintained the ‘hold’ rating for the stock but raised the price target to ₹1,400 from ₹1,290.

The VBL Thesis: The analysts said that considering the market growth, the beverages giant has likely gained market shares across segments in the March quarter. The brokerage firm highlighted key additions made by the company that drove growth in the quarter.

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The first was the launch of Sting, which accounted for 10% of net sales, the second was the launch of dairy products, and lastly steady investments in capex and visi coolers. The firm also highlighted that the company ramped up its production and distribution capacities.

The brokerage also revised its estimates for the company’s earnings “to factor in correction in input prices and strong Q1CY23” numbers. The firm also highlighted that the company continues to benefit from its association with PepsiCo.

The firm states that although they remain positive on the stock, the stock price upside is limited at current valuations. The firm highlighted that a key upside risk to its view is a “faster than expected recovery in urban and rural economies.”

Price Action: VBL share price was 3.33% to trade at ₹1,504.95 in the late hours of trading on Tuesday.

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Posted In: Analyst ColorAnalyst RatingsICICI SecuritiesPepsiCo Inc.Varun Beverages