Shares of Varun Beverages Ltd. (VBL), a prominent PepsiCo bottler, saw an 8% decline in the previous trading session following the announcement of its Q2 results. Despite this dip, a majority of leading brokerages, both foreign and domestic, have maintained their 'Buy' recommendations on the stock, signaling continued confidence in the company's long-term prospects.
Brokerages Maintain Positive Outlook on VBL
Several major financial institutions, including Goldman Sachs, CLSA, Investec, Jefferies, and Citi, reiterated their 'Buy' ratings. Morgan Stanley and JPMorgan also suggested an 'overweight' stance, while domestic brokerages such as Ambit Capital, Antique Stock Broking, DAM Capital, Nuvama, and JM Financial also recommended a 'Buy'.
Target Prices Reflect Varied Expectations
Brokerage target prices for VBL shares varied, reflecting different analytical models and outlooks. CLSA offered the highest target at Rs 629. Other notable targets included UBS at Rs 585, Morgan Stanley at Rs 557, Jefferies at Rs 615, Citi at Rs 580, and Goldman Sachs at Rs 550. Emkay Global, while maintaining a 'Buy', adjusted its target down by 15% to Rs 525 due to earnings cuts and a drop in its target multiple, attributing this to climate-related disruptions.
Conversely, Elara Securities set the lowest target at Rs 490, indicating that near-term performance would hinge on the success of new product launches or initiatives to sustain double-digit volume growth. The stock closed at Rs 429.50 apiece on Tuesday.
Strategic Advantages and Growth Drivers
Analysts highlighted several factors supporting their positive recommendations. VBL is considered relatively better positioned than its peers in terms of margin, thanks to strategic raw material (RM) stocking. Furthermore, the company's growing share of low-sugar products, which constituted 73% of its mix in H1CY26, contributed to a 40 basis points gain in India business EBITDA margin during Q2.
Emkay Global emphasized VBL's strong execution track record, consistent outperformance against FMCG peers, and growth-oriented management. Despite climatic disruptions impacting India's topline growth in April 2026, the March-June period saw robust volume growth exceeding 20%. International organic volume growth was also strong at 25%, driven by broad-based performance across various geographies.
MOFSL (Motilal Oswal Financial Services) noted healthy Q2 results with 20% year-on-year (YoY) volume growth, including 14% from India and 38% from international operations. Consolidated net realization per case improved by 1.2%, primarily fueled by international territories.
Looking ahead, MOFSL anticipates continued healthy performance, bolstered by ongoing capacity expansion, a strong distribution network, and an expanding beverage portfolio. The ramp-up of international operations, recovery in Zimbabwe, and growth in the snacks business are also expected to contribute to revenue growth and margin improvement.
Disclaimer: This article provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.