Jefferies continues to recommend a ‘Buy’ for Varun Beverages Limited (VBL), with a target price of ₹715. The recent stock price correction is attributed to concerns over increased competition from Reliance’s Campa brand, particularly regarding pricing, distribution, and marketing strategies.
Current Market Dynamics:
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Mixed Feedback: Channel checks indicate that while Campa is gaining traction, its impact is primarily against local and regional brands, with limited effect on established players like VBL.
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Valuation Perspective: Jefferies considers the recent share price correction to be exaggerated. The current valuation at 45x one-year forward P/E is deemed attractive, especially with an anticipated strong summer season serving as a short-term catalyst.
Jefferies plans to closely monitor market developments but remains confident in VBL’s robust market position and growth potential.
