Varun Beverages Share Price Jumps 3% as CLSA Upgrades Stock to ‘High Conviction Outperform’; Sees Potential Upside 70%
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What’s Drivng the Surge?
Varun Beverages’ share price has been on a tear, rising 3% in the last two trading sessions, with analysts attributing the bounce to a combination of factors. The company’s strong Q3 results, coupled with CLSA’s upgrade to "high conviction outperform," has set the stage for a potential upside of 70%.
A Breakout Above Key Resistance
Riyank Arora, Technical Analyst, Mehta Equities Ltd, highlights that Varun Beverages share price has broken out above its immediate resistance mark of 460, holding well above the same with rising volumes. This Technical analyst believes that the stock is now poised to pick momentum towards 500 and above levels, provided it holds well above the crucial support at 440.
CLSA’s Upgrade: A Game-Changer
Hong Kong-based brokerage CLSA has raised its rating on soda bottler Varun Beverages to "high conviction outperform," up from its previous "outperform" designation. The brokerage has reduced its target price for the soda company to 770 per share, down from 802, citing a potential 70% gain. The brokerage believes the risk-reward is highly attractive, even with increasing competition in the market.
A Bright Outlook for 2025
According to CLSA, the company’s EBITDA is expected to decline by 5% in CY25, due to increasing competition and capital expenditure. However, the brokerage anticipates a reduction in capex intensity in the future, which could lead to improved profitability. This paints a rosy picture for the company’s future prospects.
Q3 Results: A Strong Foundation
Varun Beverages announced a 36% increase in consolidated net profit, reaching 195.64 crore for the December quarter of 2024, driven by volume growth and enhanced margins. Revenue from operations rose to 3,817.61 crore, compared to 2,730.98 crore in the same period last year.
A Word of Caution
As always, we recommend investors exercise caution and consult with certified experts before making any investment decisions. The views and recommendations above are those of individual analysts, experts, and broking companies, not of Mint.
Key Takeaways:
- Varun Beverages share price jumps 3% as CLSA upgrades stock to ‘high conviction outperform’
- Potential upside of 70% seen by CLSA
- Strong Q3 results drive net profit growth
- PCR Book value ratios reached 4.3 in January 2025
- EBITDA expected to decline 5% in CY25
By understanding the intricacies of Varun Beverages’ performance and the market’s sentiment, investors can make informed decisions. Remember to stay vigilant and consult with experts before making any investment decisions.
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