Mehabe score: 5 G Factor: 4 Piotski Score: 6 The stock has a rating HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 4 and Piotski score of 6.
Description
Varun Beverages Ltd has been associated with PepsiCo since the 1990s and is a key player in beverage industry and one of the largest franchisee of PepsiCo in the world. The company produces and distributes a wide range of carbonated soft drinks, non-carbonated drinks and packaged water sold under trademarks owned by PepsiCo.
PepsiCo brands produced and sold by the company include Pepsi, Seven-up, Mirinda Orange, Mountain Dew, Tropicana Juices and many more.
Main Points
Part of RJ Corporation#
Varun beverages is a part of the RJ group, which is the largest franchisee for Pizza Hut, KFC, Cream Bell and Costa Coffee in India. With this distinguished track record and expertise in the QSRSite:VBLMain Symbol:VBL
Stock trades at 762.0, above its 50dma 738.35. It also trades above its 200dma 648.12. The stock remains bullish on techicals
The 52 week high is at 918.60 and the 52week low is at 430.14
Price Chart
P/E Chart
Sales and Margin
Strengths
– has delivered good profit growth of 30.02% CAGR over last 5 years
– has been maintaining a healthy dividend payout of 17.64%
Weakness
– Stock is trading at 9.36 times its book value
-Promoter holding has decreased over last quarter: -0.58%
Competition
– The industry trades at a mean P/E of 51.4x. Tasty Bite Eat. trades at the industry’s max P/E of 119.78x. VBL trades at a P/E of 81.8x
– Industry’s mean G-Factor is 3.9 while the mean Piotski score is 8.0. VBL has a G-Factor of 4 and Piotski scoreof 6.
– Average 1 month return for industry is 3.4%. The max 1- month return was given by Dodla Dairy: a return of 7.23 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 2241.0 cr compared to Rs 1676.0 cr for period ended Mar 2020, a rise of 33.7%
Operating Profits reported at Rs 382.0 cr for period ended Mar 2021 vis-vis 271.0 for period ended Mar 2020 .
Operating Margins expanded 87.7 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 2.99 compared to Rs -0.46 for previous quarter ended Dec 2020 and Rs 1.27 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 7015.0 cr for period ended TTM vis-vis sales of Rs 6450.0 cr for the period ended Dec 2020, a growth of 8.1%. The 3 year sales cagr stood at 11.2%.
Net Profit reported at Rs 403.0 cr for period ended TTM vis-vis sales of Rs 329.0 cr for the period ended Dec 2020, rising 18.4%.
Company recorded a healthy Net Profit CAGR of 11.2% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was 11.0% compared to 15.0% over the last 3 Years. – The stock has given a return of 61% on a 1 Year basis vis-vis a return of 33% over the last 3 Years. – The compounded sales growth on a TTM bassis is -6% vis-vis a compounded sales growth of 17% over the last 3 Years. – The compounded profit growth on a TTM basis is 0% vis-vis a compounded profit growth of 23% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 20.73% vis-vis 20.28% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 7.62% vis-vis 7.42% for Mar 2021
Conclusion
– has delivered good profit growth of 30.02% CAGR over last 5 years
– has been maintaining a healthy dividend payout of 17.64% – Stock is trading at 9.36 times its book value
-Promoter holding has decreased over last quarter: -0.58%
The business fundamentals of the stock remain stable. Stronger near term results will build interest in the stock. We suggest to wait for a upturn in business performance.
Technically, the stock remains above its 50 DMA 738.35 and is trading at 762.0, thus bullish price action wise.
