Varun Beverages Q3 Review- Strong Volume Growth, Improving Margins Underpin The Overall Performance: DRChoksey

Deven Choksey Research Report

Varun Beverages Ltd. showcased a healthy performance in Q3 CY24 results, which outperformed our estimates across the board. • Consolidated revenue stood at Rs 48,047 million, grew by 24.1% YoY, outperformed our estimate by 3.6%.

The revenue growth was driven by expanded distribution network, increased product penetration and favorable demand trends in key markets.

Ebitda reached to Rs 11,511 million, grew by 30.5% YoY, bet our estimate. The growth was led by better operating performance. The corresponding Ebitda margin improved by 117 bps YoY to 24.0%.

PAT stood at Rs 6,196 million, reporting a growth of 23.7% YoY, which surpassed our estimate. Mainly due to better operating performance and lower than expected tax expenses.

We maintain our CY26E adjusted earnings per share, mainly due to strong revenue growth, geographic expansion, and cost efficiencies.

We reiterate our Buy rating, valuing the company with a maintained PE multiple of 57 times on a CY26E EPS of Rs 12.9. Consequently, we arrive at a target price of Rs 738, indicating an upside of 24% from the current market price.

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