Varun Beverages is re-energised; know about the stock’s true potential

Varun Beverages has been a consistent outperformer among its peers and the broader market this year.

While 2022 was full of surprises for the Indian market and many stocks saw their valuations getting corrected, it was also the year for fundamentally good quality stocks that saw strong buying interest from the institutions, thus being recognized for the potential they hold. One such stock is Varun Beverages which has jumped nearly 100% this year. On Wednesday, the stock gained over 4% and traded near an all-time high level of Rs 1194.70 on NSE. This PepsiCo franchisee is already one of the hot stocks on D-street.

In its Q2FY23 results released on November 1, the company reported a 33% YoY jump in revenue in September 2022 while net profit surged 58% YoY to Rs 381 crore. The company has a strong presence in the aerated drinks segment with its key brands Pepsi, Seven-Up, Nimbooz, Sting and Mountain Dew. The management remains optimistic about growth in urban as well as rural India. VBL’s share of PepsiCo beverages volume sales increased from nearly 26% in Fiscal 2011 to 85%+ now.

Technically, all the key moving averages of the stock are in an uptrend, which shows strong momentum over the medium term. The volumes recorded lately have been massive, which indicates strong buying activity. The 14-period daily RSI (65.42) is in the bullish territory and shows strong strength in the stock. The MACD line is above the signal line and demonstrates bullish momentum. The OBV, too, indicates rising buying interest in the stock. The TSI and KST indicators are bullish. In a nutshell, the stock is expected to scale further highs in the medium to long term.

With all the factors favouring the growth of the stock, it is a good candidate to add to one’s portfolio. The stock is all energized, and ready to unleash its true potential. Currently, the VBL share price is Rs 1155 on NSE. Long-term investors should keep an eye on this stock.