Shares of Varun Beverages Limited rose more than 3% in early trade on Monday after brokerage Bank of America Securities reiterated its ‘Buy’ rating on the stock, citing favourable risk-reward and strong growth prospects ahead of the peak summer season.
The stock climbed to an intraday high of ₹416.40 on the National Stock Exchange of India, compared with the previous close of ₹401.30. The stock was trading around ₹410 during the morning session, up more than 2%.
BofA maintained a price target of ₹550 per share, implying a potential upside from current levels. The brokerage said the company is preparing for the upcoming peak summer demand, supported by capacity expansion and product portfolio innovation.
The brokerage noted that Varun Beverages has added around 40–45% capacity in India over the past two years, which should help it cater to rising demand during the summer months. The company has also turned free cash flow positive, which strengthens its financial profile.
According to the research note, the company is expanding its beverage portfolio across energy drinks, hydration beverages and value-added categories. Products such as Nimbooz and energy drink variants are seeing strong traction, while the company is also pushing growth in sports drinks and dairy-based beverages.
BofA also highlighted the company’s international expansion strategy, noting steady growth in overseas markets. The brokerage said the proposed Twizza acquisition in South Africa could add another 4–6% to Varun Beverages’ volumes, revenue and EBITDA once completed.
The brokerage believes that with reasonable growth prospects and valuations currently below historical averages and consumer peers, the risk-reward for the stock remains attractive.
Varun Beverages, the largest franchise bottler for PepsiCo products outside the United States, manufactures and distributes a range of beverages including Pepsi, Mountain Dew, Sting and Nimbooz across India and several international markets.