Varun Beverages Ltd., a longstanding partner of PepsiCo since the 1990s, stands as a key player in the beverage industry and holds the distinction of being one of the largest franchisees of PepsiCo globally. Over the years, the stock of Varun Beverages has proven to be a lucrative investment, providing substantial returns to investors. In this article, we delve into the reasons behind its impressive performance and explore whether this multibagger stock deserves a place in your investment portfolio.
Impressive Trajectory on the Weekly Chart
The weekly chart of Varun Beverages reflects a remarkable upward trajectory.
In the past three years alone, the stock has delivered returns exceeding 440%. To put this into perspective, consider an investment of 50,000 rupees in Varun Beverages stock at 202 rupees per share in December 2020. With the current stock price surpassing 1100 rupees per share, the profit from this investment would now stand at more than 2,22,578.96 rupees, showcasing the stock’s extraordinary growth.
Quarterly Results Showcase Robust Performance
Varun Beverages recently reported a consolidated net profit of Rs 514.05 crore for the September quarter of FY24, marking a substantial growth of 29.98% from the year-ago period. The total revenue for the third quarter reached Rs 3,937.75 crore, a 21.22% increase from the previous year. The impressive financials were driven by double-digit growth in both Indian and international markets. Notably, the EBITDA for the quarter reached Rs 883 crore, growing by an impressive 48%, with an EBITDA margin of 22.4%, up from 18.4% in the previous year.
Strategic Initiatives and Expansion Plans
Ravi Jaipuria, Chairman of Varun Beverages Limited, expressed optimism about the company’s growth prospects, emphasizing India’s dynamic demographic landscape and evolving consumption patterns. With strategic initiatives focused on strengthening their position in the global beverage industry, the company is intensifying its foothold in India and expanding its reach in Africa. The recent approval for the incorporation of a subsidiary company in Mozambique reflects Varun Beverages’ commitment to expanding its business operations in new markets.
Key Drivers Propelling the Fizz
- Rural Penetration: India’s burgeoning young population and evolving consumption patterns in rural areas present an immense growth opportunity for Varun Beverages. The company’s strategic focus on rural penetration unlocks massive potential.
- Capacity Gains: Consistent capacity expansion plans ensure Varun Beverages is well-equipped to cater to the ever-growing demand for its beverages.
- Strong Financials: With a 49.2% CAGR profit growth over the past five years and a healthy 17.6% dividend payout, Varun Beverages exhibits financial stability and investor-friendly practices.
- Rising FII Interest: Foreign institutional investors are increasingly recognizing Varun Beverages potential, further fueling its ascent.
For investors exploring potential opportunities in the Beverage Industry, Varun Beverages’ impressive growth and the subsequent key factors make it a promising option. However, it is crucial to conduct thorough research and evaluate your financial goals before making any investment decisions.
Disclaimer: (This information is provided solely for informational purposes. It is important to note that investing in the market or a business idea involves market risks. Before investing money as an investor/ owner/ partner, always consult an expert. DNP News Network Private Limited never advises to invest money on stocks or any specific business idea. We will not be liable for any financial losses.)
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