According to Kotak Institutional Equities, the underlying Varun Beverages are healthy, with a two-year organic volume CAGR of 11.7% in the first quarter of 2009. Monthly sales were flat, despite strong growth in the first two weeks of April and a sharp decline in the two weeks following the blockade / restriction. The short-term outlook remains uncertain, as local blockades / restrictions affect about 30-40% of businesses (on-the-go / on-the-go consumption + institutional sales), but at home. It is partially offset by increased consumption. .. Management expects continued momentum in the local market. The net impact on offtake is expected to be much smaller than in the first wave.
Medium-term triggers look great for the following reasons:
(1) Increased distribution led to market share in South / West India
(2) Excellent traction at the time of new release
(3) Sustainable cost reduction
See Zee Business Live TV Streaming below.
According to Kotak Institutional Equities, Varun beverages recorded a 34% year-on-year increase in domestic sales, supported by a recovery in out-of-home consumption and continued strong domestic demand. Based on a two-year CAGR, consolidated organic volume increased 11.7% year-on-year. Rural demand continues to outpace urban demand, with first-quarter sales up more than 50% year-on-year. International business also recorded strong year-over-year growth of 26% during the quarter. North and East recorded 38% year-on-year growth in the first quarter, ahead of the South and West markets. The short-term outlook remains uncertain, with an increasing number of cases of Covid requiring a localized blockade.
Varun Beverages Management was slightly affected by the closure of retail stores in multiple cities towards the end of April, despite the net impact expected to be much lower than the previous year’s blockade. Was emphasized. Today, the manufacturing unit is operating at normal levels.
Kotak has reduced CY2021 volume and EBITDA estimates by about 7-8% and maintains CY2022 estimates widely. Kotak’s domestic sales volume from May to June 2021 decreased by 15% compared to May to June 2019, and 3QCY21E increased by 3% from 3QCY19, and has shown healthy growth since then. Kotak rollover and DCF-based FV revision to 1150 rupees (1125 rupees). This means revenue on June 29, 23E and 15 times EV / EBITDA.
Stocks to Buy-Learn why VarunBeverages Kotak buys this stock at the target price Rs1150
Source link Stocks to Buy-Learn why VarunBeverages Kotak buys this stock at the target price Rs1150