Varun Beverages - Focus On Sustainable Growth Path: Motilal Oswal
Favorable industry outlook aids revenue growth.
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Motilal Oswal Report
Varun Beverages Ltd. in the CY22 annual report highlighted its efforts to grow sustainably in a high-potential business segment through its strong manufacturing and distribution capabilities, which give an edge to the company.
We expect Varun Beverages to maintain its earnings momentum, underpinned-
by high demand due to the early onset of summer, high temperature and further possibility of an El Nino event,
increased penetration in newly acquired territories in South and West India, and
higher acceptance of newly launched products.
The increasing penetration of refrigerators in semi-urban and rural areas bodes well for Varun Beverages’ products, as the customer base is expanding at a rapid pace in these regions.
Further, to capture the growing market, Varun Beverages is increasing capacities by 20%, which are likely to be operational before the summer (except for the dairy beverage facility that will be operational by July 2023).
We expect a revenue/ Ebtda/profit after tax compound annual growth rate of 16%/18%/27% over CY22-24.
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