Bottling firm Varun Beverages has given stellar returns in the last 5 years to patient investors. It has given over 300 percent returns to its investors in this period. The stock surged from around Rs 270 in 2016 to over Rs 1,100 currently.
To put it in perspective, an investment of Rs 10,000 in 2016 would have turned to over Rs 40,000 in 2021. Just in the last year, the stock has risen 77 percent despite COVID-19 concerns.
It hit its 52-week high of Rs 1,149 on June 8, 2021, and a 52-week low of Rs 589 on June 21, 2020.
The company is the second-largest bottling company for PepsiCo outside the US. It mainly manufactures, bottles and distributes beverages. It was incorporated in 1995 as a subsidiary of RJ Corp, and named after founder Ravi Jaipuria's son.
The company ended the financial year FY21 on a strong note.
For the March quarter, the firm reported a more than two-fold jump in consolidated net profit to Rs 136.75 crore helped by volume growth across domestic and international markets.
The company, which follows the calendar year as its financial year, had posted a net profit of Rs 60.06 crore in the year-ago period.
"PAT was driven higher revenues, improvement in margins and higher profitability from international operations," the company stated. It registered a strong volume growth of 33 percent YoY.
The macro-environment in the quarter was largely supportive as consumption was almost nearing a sense of normalcy. About the outlook, the company said the environment has evolved now with the onset of the second wave of COVID infections in the country and was now witnessing more localised, micro lockdowns and restrictions being imposed rather than a nationwide lockdown witnessed last year.
It is confident of the medium to the longer-term outlook of the business.
Brokerages are also bullish on the company’s prospects. Axis Securities as well as ICICI Direct has a target price of Rs 1,200 for the stock.
As per Axis, Varun Beverages is well placed this year despite the pandemic thanks to better preparedness and strong traction from new product launches. It added that rural markets continue to grow better than urban ones.
Meanwhile, ICICI said, "With strong volume growth, robust operating margins and declining interest cost (with debt reduction), we expect net profit CAGR of 57.4 percent in CY20-22E." It also upgraded the stock to 'BUY' from the 'HOLD' rating earlier.
(Edited by: By Jomy Jos Pullokaran)
First Published: IST