Varun Beverages Shares In Focus As Brokerages Offer Mixed Views — Check Target Price

Shares of Varun Beverages Ltd. remain in sharp focus on Thursday, a day after the company reported in-line September quarter results and most importantly, announced a major strategic move into the alcoholic beverage segment.

Brokerages have offered mixed views on Varun Beverages following the company's earnings reports and entry into the alco-bev business.

Goldman Sachs reiterated a 'buy' on Varun Beverages while hiking its target price to Rs 615 from Rs 590.

The firm noted that domestic business growth showed signs of recovery in October, especially now that peak winter-related headwinds are over.

Goldman Sachs is optimistic about the company's new venture, stating the "distribution arrangement with Carlsberg for African markets opens up a large potential TAM (Total Addressable Market)."

On the other hand, Citi, while maintaining a 'buy' rating on the counter, has trimmed its target price from Rs 685 to Rs 675.

The firm believes that domestic business softness is 'transient', stating that performance will improve eventually.

As for the venture into the alcoholic beverages segment, Citi sees the Carlsberg deal, as "potential catalysts" for long-term growth.

The brokerage even noted that a potential launch in this segment "could help allay investor concerns on market shares."

Varun Beverages is one of the largest franchisees of PepsiCo. It distributes a wide range of carbonated soft drinks, as well as a large selection of non-carbonated beverages, including packaged drinking water in India.

But on Wednesday, the board approved plans to add an alcoholic beverage business to the main objects of the Memorandum of Association of the company.

Certain African subsidiaries of VBL will now test the beer market in their territories. They have entered into an exclusive distribution agreement with Denmark's Carlsberg Breweries A/S for their popular brand 'Carlsberg'.