Synopsis: Brokerages Macquarie Group, CLSA, Citigroup, Jefferies Financial Group, and HSBC remain positive on Varun Beverages Limited, citing strong volume growth, operational efficiency, summer demand tailwinds, and expansion-driven margin improvement despite mild realizations pressure.
This Large-cap FMCG stock, engaged in manufacturing, bottling, distribution, and sale of PepsiCo beverages, including carbonated drinks, juices, and packaged water across multiple international markets, is in focus after the company reported its March quarterly results, while brokerages Macquarie, Citi, HSBC, and Jefferies shared positive views on its future outlook.
With a market capitalization of Rs. 1,75,023.38 crores, the share of Varun Beverages Limited has reached an intraday high of Rs. 529 per equity share, rising nearly 1.90 percent from its previous day’s close price of Rs. 519.15. Since then, the stock has retreated and is currently trading at Rs. 517.50 per equity share.
What is the News?
Macquarie, a prominent brokerage firm, has recommended a “high conviction outperform” call on Varun Beverages Limited with a target price of Rs. 654 per share, indicating an upside potential of 26.38 percent from its current Price of Rs. 517.50 per share.
CLSA has reiterated its “high conviction outperform” rating on the stock, highlighting strong operational performance. The company reported revenue growth of 18.3 percent year-on-year, which exceeded expectations. This growth was mainly supported by a 12.7 percent increase in standalone beverage sales, showing steady demand in its core segment.
India volumes rose by 14.4 percent compared to last year, although realisations dipped slightly by 1.5 percent due to changes in product mix. Despite this, consolidated EBITDA came in well above estimates, beating forecasts by 18 percent and surpassing market expectations by 14 percent, indicating strong cost control and efficiency.
Looking ahead, CLSA expects the company to benefit from a strong summer season. Expansion in production capacity is likely to improve cost efficiency, while wider distribution will support growth. The company aims to reach 4.5 million outlets by 2026 and maintains comfortable inventory levels for near-term demand.
Similarly, Citi has recommended a “Buy” call on Varun Beverages Limited with an increased target price to Rs. 640 from Rs. 575 per share, indicating an upside potential of 23.67 percent from its current Price.
Citi has maintained a Buy rating on Varun Beverages, supported by strong volume growth in India and continued positive momentum seen in April. The outlook remains favorable due to an intense summer season and a supportive base. While there is a slight decline in realisations, it is limited, and the company is expected to benefit from operating leverage, which should help improve margins and overall profitability going forward.
Further, Jefferies has recommended a “Buy” call on Varun Beverages Limited with an increased target price to Rs. 615 from Rs. 550 per share, indicating an upside potential of 18.84 percent from its current Price.
Jefferies has maintained a Buy rating on Varun Beverages, calling the quarter “a refreshing one.” The company reported over 14% volume growth in India, despite competition concerns from players like Campa Cola, while margins remained stable. The brokerage also highlighted strong and broad-based performance in international markets. Management remains optimistic about future growth and margins, supported by overall expansion in the beverage market.
HSBC has also recommended a “Hold” call on Varun Beverages Limited with a target price of Rs. 600 per share, indicating an upside potential of 15.94 percent from its current Price.
HSBC has a Hold rating on Varun Beverages, noting a strong start to the year and expecting healthy demand during the peak summer season. It added that changing industry dynamics may require continued investment, while better integration and improved route-to-market strategies could support growth in international markets.
Q4 FY26 Result Walkthrough
Coming into the quarterly results of Varun Beverages Limited, the company’s consolidated revenue from operations increased by 18.09 percent YOY, from Rs. 5,567 crore in Q4 FY25 to Rs. 6,574 crore in Q4 FY26, and grew by 56.37 percent QoQ from Rs. 4,204 crore in Q3 FY26.
In Q4 FY26, Varun Beverages Limited’s consolidated net profit increased by 20.25 percent YOY, reaching Rs. 879 crore compared to Rs. 731 crore during the same period last year. As compared to Q3 FY26, the net profit has increased by 238.08 percent, from Rs. 260 crore.
The basic earnings per share increased by 20 percent and stood at Rs. 2.58 as against Rs. 2.15 recorded in the same quarter in the previous year, FY2025. Varun Beverages Limited’s revenue and net profit have grown at a CAGR of 27.44 percent and 53.7 percent, respectively, over the last five years. In terms of return ratios, the company’s ROCE and ROE stand at 19.7 percent and 16.2 percent, respectively. Varun Beverages Limited has an earnings per share (EPS) of Rs. 9.41, and its debt-to-equity ratio is 0.13x.
Dividend: Varun Beverages Limited’s board of directors has recommended paying a interim dividend at the rate of 25 percent on the face value of paid-up equity shares of Rs. 2 each for the financial year 2025-26, which is a dividend of Rs. 0.50 per equity share.
Company Overview
Varun Beverages Limited was founded in 1995 and is one of India’s largest beverage companies and a key bottling partner of PepsiCo. The company manufactures, bottles, and distributes PepsiCo’s range of soft drinks, packaged water, and juice brands across India and several international markets. It plays a central role in PepsiCo’s growth strategy in South Asia.
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
The post Varun Beverages: Should You Buy, Sell or Hold After Their Q4 Results? appeared first on Trade Brains.