Why Pepsico's India Bottler Shares Are Up More Than 4% Today

VBL shares are soaring at the bourses on Tuesday after BoFA Securities continued to recommend a ‘buy’ for Varun Beverages and has increased its price target to ₹1,030 per share, marking the highest price target for the world’s second-largest PepsiCo bottling company.

What Happened? BoFA Securities stands as the sole brokerage predicting the shares of Varun Beverages to surpass ₹1,000 each within the coming 12 months.

This revised target suggests an 11% potential increase from Varun Beverages’ Monday closing price. The shares of Varun Beverages have already experienced a 40% increase in 2023.

Since its late 2016 listing, Varun Beverages has consistently yielded positive annual returns and regularly rewarded its shareholders through dividends and bonus issues, declaring three bonus issues in the past three years.

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A positive outlook: Despite the stock’s impressive performance, BoFA Securities maintains a positive outlook, anticipating sustained revenue and profit growth for the company amid economic uncertainties. The brokerage identifies three potential growth drivers for Varun Beverages: enhanced distribution, expansion into new territories, and the introduction of new product lines.

BoFA Securities forecasts a 19% compounded annual growth rate (CAGR) in revenue and a 23% CAGR in earnings per share (EPS) for Varun Beverages over the next three years, exceeding the average projections. Despite the potential impact of erratic monsoons on consumption, BoFA Securities bases its growth projections on long-term factors beyond the unpredictable season.

Price Action: Shares of Varun Beverages were trading 4.16% higher at ₹964.50 on Tuesday morning after the stock ended nearly a percent higher at ₹927 on Monday.

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Posted In: Price TargetReiterationAnalyst RatingsMoversTrading IdeasBofA SecuritiesVarun BeveragesVBL