Mehabe score: 5 G Factor: 5 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 5 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. Site:VBL Main Symbol:VBL
Stock trades at 906.0, below its 50dma 916.25. However it is trading above its 200dma 842.84. The stock remains weak in the short term due to near term bearish momentum. However overall bullish structure remains intact. Price action will further build up as it moves above its dma50, currently situated at 916.25.
The 52 week high is at 1020.00 and the 52week low is at 582.30
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
– is expected to give good quarter
– has delivered good profit growth of 71.51% CAGR over last 5 years
Weakness
– Stock is trading at 9.62 times its book value
– might be capitalizing the interest cost
-Promoter holding has decreased over last 3 years: -8.67%
Competition
– The industry trades at a mean P/E of 41.6x. Tasty Bite Eat. trades at the industry’s max P/E of 145.0x. VBL trades at a P/E of 56.5x
– Industry’s mean G-Factor is 3.0 while the mean Piotski score is 8.0. VBL has a G-Factor of 5 and Piotski scoreof 6.
– Average 1 month return for industry is -9.7%. The max 1- month return was given by Varun Beverages: a return of -3.77 %
Quarterly Results
Sales for period ended Dec 2021 is Rs 1734.0 cr compared to Rs 1331.0 cr for period ended Dec 2020, a rise of 30.3% .
vis-vis 172.0 for period ended Dec 2020 .
Operating Margins contracted -92.7 bps for period ended Dec 2021 vis-vis Dec 2020.
Company reported operating profit of Rs 208.0 cr for period ended Dec 2021 and operating profit margin at 12.0 % for same period.
The EPS for quarter ended Dec 2021 is Rs 0.38 compared to Rs 5.55 for previous quarter ended Sep 2021 and Rs -0.46 for Dec 2020.
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 8823.0 cr for period ended Dec 2021 vis-vis sales of Rs 6450.0 cr for the period ended Dec 2020, a healthy growth of 26.9%. The 3 year sales cagr stood at 20.0%.
Net Profit reported at Rs 694.0 cr for period ended Dec 2021 vis-vis sales of Rs 329.0 cr for the period ended Dec 2020, rising 52.6%.
Company recorded a healthy Net Profit CAGR of 33.3% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 1231.0 cr for period ended Dec 2021 vis-vis Rs 1012.0 cr for period ended Dec 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 18.0% compared to 16.0% over the last 3 Years. – The stock has given a return of 37% on a 1 Year basis vis-vis a return of 36% over the last 3 Years. – The compounded sales growth on a TTM bassis is 37% vis-vis a compounded sales growth of 20% over the last 3 Years. – The compounded profit growth on a TTM basis is 81% vis-vis a compounded profit growth of 31% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Dec 2021 fii holding stood at 21.23% vis-vis 21.72% for Sep 2021 – Public shareholding has remained largely constant. The Dec 2021 public holding stood at 6.82% vis-vis 6.62% for Sep 2021
Conclusion
– has reduced debt.
– is expected to give good quarter
– has delivered good profit growth of 71.51% CAGR over last 5 years – Stock is trading at 9.62 times its book value
– might be capitalizing the interest cost
-Promoter holding has decreased over last 3 years: -8.67%
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 below its 50 DMA 916.25 and is trading at 906.0. Shows a near term lack of buying interest.
