VBL - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 4.3

🧠 Fundamental Analysis of Varun Beverages Ltd (VBL)

✅ Strengths

Exceptional Profitability

ROCE: 24.8%, ROE: 22.5% — strong capital efficiency

EPS: ₹8.50, with PAT Qtr: ₹1,317 Cr — robust earnings momentum

Growth-Oriented Valuation

PEG Ratio: 1.10 — fair valuation for a growth stock

Industry PE: 82.4 vs Stock PE: 60.8 — relatively cheaper than peers

Technical Momentum

MACD: +6.92, RSI: 67.9 — bullish trend, nearing overbought

Volume Surge — 2.5x above weekly average, strong buying interest

Low Leverage

Debt-to-Equity: 0.12 — conservative capital structure

Institutional Confidence

DII Hold ↑ 1.33% — domestic investors increasing stake

⚠️ Concerns

High Valuation

P/E: 60.8 — premium pricing, demands sustained growth

Book Value: ₹54.3 vs Price: ₹512 — ~9.4x book, expensive

Low Dividend Yield: 0.20% — not ideal for income-focused investors

FII Outflow: -1.12% — foreign investors trimming exposure

RSI Near 70 — short-term overheating risk

📉 Ideal Entry Price Zone

Entry Zone: ₹470–₹490

Near DMA 50 and below current price

Offers better margin of safety without compromising trend

🧭 Long-Term Investment Outlook

VBL is a strong candidate for long-term investment, especially for growth-focused investors. Its high ROE/ROCE, consistent earnings, and fair PEG ratio support a multi-year holding strategy.

Holding Period: 3–5 years

Ideal for compounding returns through earnings growth

Reassess if ROE drops below 18% or PEG rises above 1.5

🚪 Exit Strategy (If Already Holding)

Partial Exit Zone: ₹640–₹680

Near 52-week high and potential resistance

Full Exit

If ROE falls below 15% for 2+ quarters

If PEG exceeds 2.0 without earnings acceleration

If price breaks below ₹450 and fails to recover

Reinvest: On dips near ₹470 if fundamentals remain intact

Would you like a side-by-side comparison with other FMCG growth stocks like Tata Consumer, Nestlé India, or Britannia to assess relative strength?

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