Published on 10/06/2022 5:18:33 PM | Source: IANS

Motilal Oswal recommends Varun Beverages shares

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Brokerage house Motilal Oswal Financial Services has recommended investors to buy shares of Varun Beverages, pegging a target price of Rs 820.

Varun Beverages is a major player in beverage industry and one of the largest franchisee of PepsiCo outside the US.

On Friday's closing, the shares of the company were at Rs 750.

Varun Beverages is expected to benefit from a strong recovery going forward, led by a growing out-of-home consumption, with the opening up of offices and traveling, uptick in volumes in new territories and traction in new products such as Sting, Value Added Dairy and Tropicana, the brokerage said in a note.

"Varun Beverages has signed a co-packing agreement to manufacture 'Kurkure Puffcorn' for PepsiCo India in February 2022. This is the first time that it has ventured into the manufacture of non-beverages," the note added.

In the long-term, the company may acquire additional manufacturing and distribution rights of other food products of PepsiCo.

Varun Beverages' revenue, EBITDA, and profit after tax are estimated to be 16 per cent, 21 per cent, and 38 per cent, on a compound annual growth rate (CAGR) basis, over 2021-23, the brokerage said.