Add Varun Beverages, target price Rs 1100: ICICI Securities

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Add Varun Beverages, target price Rs 1100:  ICICI Securities


has add call on Varun Beverages with a target price of Rs 1100. The current market price of is Rs 991.75.

Varun Beverages Ltd., incorporated in the year 1995, is a Large Cap company (having a market cap of Rs 28829.90 Crore) operating in FMCG sector.

Financials
For the quarter ended 31-12-2020, the company reported a Consolidated Total Income of Rs 1336.46 Crore, down -26.00 % from last quarter Total Income of Rs 1806.11 Crore and up 6.39 % from last year same quarter Total Income of Rs 1256.23 Crore. Company reported net profit after tax of Rs -7.24 Crore in latest quarter.

Investment Rationale
The brokerage models Varun to report revenue and PAT CAGRs of 25.5% and 55.9% respectively, over CY20-CY22E. Company continues to benefit from its relationship with PepsiCo, pan-India distribution, backward integration, and increased in-home consumption. Maintain ADD with a DCF-based target price of Rs1,100 (35x CY22E). Key risks: Sharp increase in competitive pressures and hike in raw material prices.


Promoter/FII Holdings
Promoters held 66.4 per cent stake in the company as of Dec 30, 2020, while FIIs held 20.8 per cent, DIIs 5.5 per cent and public and others 7.3 per cent.



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