Varun Beverages jumps on bargain hunting

Varun Beverages spurted 4.38% to Rs 1184.50 on bargain hunting after recent steep losses.

Shares of Varun Beverages dropped 13.24% in the past four trading sessions.

The stock hit a record high of Rs 1,432.05 on 12 December 2022. The stock hit a 52-week low of Rs 557.51 on 24 February 2022.

The stock had underperformed the market over the past one month, falling 13.96% compared with 1.55% fall in the Sensex.

The counter had outperformed the market in past one quarter, advancing 16.46% as against Sensex's 4.26% rise.

The scrip had outperformed the market in past one year, rising 95.38% as against Sensex's 1.36% fall.

On the technical front, the stock's daily RSI (relative strength index) stood at 37.12. The RSI oscillates between zero and 100. Traditionally, the RSI is considered overbought when above 70 and oversold when below 30.

On the daily chart, the stock was trading above its 100-day and 200-day simple moving average (SMA) placed at 1165.71 and 976.43, respectively. The stock was, however, trading below its 50 DMA placed at 1261.90.

Varun Beverages is a key player in beverage industry and one of the largest franchisees of PepsiCo in the world (outside USA). The company produces and distributes a wide range of carbonated soft drinks (CSDs), as well as a large selection of non-carbonated beverages (NCBs), including packaged drinking water sold under trademarks owned by PepsiCo. As on date, VBL has been granted franchises for various PepsiCo products across 27 States and 7 Union Territories in India. VBL has also been granted the franchise for various PepsiCo products for the territories of Nepal, Sri Lanka, Morocco, Zambia and Zimbabwe.

On a consolidated basis, net profit of Varun Beverages reported 53.3% rise in consolidated net profit to Rs 395.5 crore in Q3 CY22 from Rs 257.9 crore in Q3 CY21. The improved profitability was driven by high growth in revenue from operations, improvement in margins, and transition to a lower tax rate in India, the company said. Net revenue from operations during the quarter grew by 32.5% YoY to Rs 3,176.6 crore, on account of robust volume growth over last year and higher realization on a consolidated basis.

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