IIFL Securities's Stock Pick Today: Buy Varun Beverages with Target Rs 1730

IIFL Securities has issued a buy call on Varun Beverages, setting a target price of Rs 1730 for the stock, currently trading at Rs 1686.9. This recommendation signifies the firm's positive outlook on the beverage company, citing its strong market position in the fast-moving consumer goods (FMCG) sector, particularly in the carbonated soft drinks (CSD) market. IIFL Securities expects Varun Beverages to benefit from the gradual recovery in economic activity and increasing consumer spending.

About Varun Beverages:

Varun Beverages Limited (VBL) is a leading beverage manufacturer and distributor in India, with a significant presence in the Asia Pacific region. The company primarily manufactures, markets, and distributes PepsiCo products, including Pepsi, Mountain Dew, Mirinda, Tropicana, and Gatorade. VBL has a wide distribution network covering over 1.7 million outlets across India and other markets. The company operates bottling plants in strategically located regions to ensure efficient and timely delivery of products. VBL is known for its robust manufacturing capabilities, innovative marketing initiatives, and commitment to sustainability.

52 Week Price Trend:

Despite facing headwinds from inflationary pressures and supply chain disruptions, Varun Beverages (NSE: VBL) continues to exhibit resilience. Trading at Rs 1686.9, the stock has witnessed a significant climb from its 52-week low of Rs 633.3. However, it remains below its 52-week high of Rs 1561.95, indicating potential for further growth. With its strong brand portfolio, extensive distribution network, and focus on cost optimization, VBL remains well-positioned to navigate challenges and capture market opportunities. Investors may consider monitoring the stock's performance closely for value-based entry points.

Stratzy's MOST Analysis:

VBL's strong fundamental position is reflected in its exceptional AAA rating from Stratzy's MOST framework. This comprehensive assessment considers key aspects of a company's Management, Outlook, Safety, and Trend. VBL's high rating indicates that it possesses a solid management team, a favorable long-term outlook, a robust financial foundation, and a positive growth trajectory. This low fundamental risk profile positions VBL as an attractive investment for those seeking stability and potential growth.

Company's Fundamentals:

Varun Beverages (NSE: VBL) is a company that manufactures and distributes beverages, primarily PepsiCo products. The company's stock is listed on the National Stock Exchange of India (NSE) with a stock price-to-earnings (PE) ratio of 97.09, indicating its valuation is relatively high compared to its earnings. The price-to-book (PB) ratio of 28.77 suggests that the market value of the company's assets is significantly higher than its book value. Despite its high valuation, Varun Beverages offers a low dividend yield of only 0.08%, indicating that the company is not currently focusing on distributing dividends to its shareholders.

Fundamental and Technical information provided in this blog were last updated on 26 Jul, 2024

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