Varun Beverages has been a safe wager for long term investors with the stock rallying over 150 percent in the last 5 years. The beverage company has also jumped over 45 percent in the last 1 year despite the economic slowdown.

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The scrip more than doubled from Rs 293 in 2014 to Rs 756 in 2019, indicating a 158 percent jump in its share price. An investment of Rs 1 lakh in 2014 would have given a return of Rs 2.58 lakh today.

It hit a 52-week high of Rs 788.75 on November 7, 2019 and 52-week low of Rs 455.29 on December 14, 2018. It has risen 36 percent in 2019.

The company has been a hit with investors and brokerages alike and has been a robust performer in terms of earnings. In the September-quarter, the company's consolidated net profit rose 83.7 percent to Rs 81.1 crore versus Rs 44.1 crore compared annually, while revenue was up 47.5 percent at Rs 1,777 crore versus Rs 1,204.5 crore, in the same period last year.

Its EBITDA was up 54.2 percent at Rs 325.6 crore and EBITDA margin rose to 18.3 percent. The management said growth initiatives continue to be on-track, including setting up of a Greenfield facility at Pathankot, acquisition of South and West India sub-territories and other investments to drive growth. The company confident of strengthening its market share across categories and drive volumes to sustain growth momentum going forward.

Post the earnings announcement, global brokerage CLSA remained bullish on the stock. The company has posted strong growth in the international segment and it remains as our preferred pick in the consumer space, said CLSA. The double-digit growth appears commendable in the current context and management appeared confident in its near-term outlook, it added.

IIFL Securities also concurred stating that the earnings have been driven by better than expected top-line growth in India and international geographies, gross margin expansion and lower than expected depreciation costs. With a capacity utilisation of 70 percent in peak months, the brokerage believes that the current phase of high growth (driven by distribution expansion in under-penetrated territories) can sustain for the next two years without any major capex, resulting in strong free cash flow generation.

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First Published:Nov 8, 2019 2:19 PM IST