Varun Beverages shares jump 9% in 3 days. Why Jefferies, Motilal, and others are bullish after Q4 results?

Shares of PepsiCo bottler Varun Beverages (VBL) extended gains for the third straight session on Tuesday, rising 2% to an intraday high of Rs 529. The stock has climbed 9% over the last three trading sessions and is up 35% in the past month.

The recent rally follows the company’s Q1 CY2026 earnings announced on Monday. Varun Beverages reported a 20.1% rise in consolidated net profit to Rs 878.71 crore for the quarter, compared with Rs 731 crore in the same period last year.

For the quarter under review, the company’s revenue from operations rose 18.1% to Rs 6,574 crore, compared to Rs 5,567 crore in the same period last year.

EBITDA rose 21% to Rs 1,528.93 crore in Q1 CY2026 from Rs 1,263.96 crore in Q1 CY2025. EBITDA margin improved by 55 basis points to 23.3% during the quarter. In India, EBITDA margin expanded by 112 basis points, supported by operational efficiencies from strong volume growth and better gross margins.

Consolidated sales volume grew 16.3% to 363.4 million cases in Q1 CY2026 from 312.4 million cases in Q1 CY2025, driven by strong volume growth of 14.4% in India and 21.4% in international markets.

Jefferies on Varun Beverages

With a Buy rating and target price of Rs 615, the global brokerage said Varun Beverages delivered a strong quarter, with volume growth of more than 14% in India and stable margins, a positive outcome amid concerns over rising competition from Campa. The international business also posted a broad-based and healthy performance.

The brokerage added that the summer season has begun on a strong note and will be a key driver for growth going forward, while a favourable base is also supporting momentum. Management remains unfazed by increasing competition, particularly from Campa.

Lower discounts and efficiency gains, including benefits from new plants, are expected to support margins ahead. On international margins, Varun Beverages holds raw material inventory for six months, providing good visibility. In India, the company has sufficient inventory for the second quarter and is partly covered for the third quarter. Any additional cost impact is likely to be offset through lower discounts and cost-control measures.

Motilal Oswal on Varun Beverages stock

The domestic brokerage has maintained its Buy rating on Varun Beverages with a target price of Rs 600, implying a potential upside of 16%. Analysts expect the company to see stronger earnings momentum, supported by an extreme heatwave this year due to El Niño, which could boost peak summer demand.

It also sees growth driven by a scale-up in international operations, led by South Africa and a recovery in the Zimbabwe market. In India, improving on-ground execution is expected to further support performance.

Motilal Oswal also highlighted the scale-up of the snacking business, backed by the operationalisation of the Morocco and Zimbabwe markets in the second half of CY2025. In addition, the company’s expanding product portfolio, including the recent launch of the energy drink ‘Adrenaline Rush’, is expected to aid future growth.

JM Financial on Varun Beverages shares

With a target of Rs 600, JM forecasts 16% upside. Management is optimistic about India’s volume trajectory and margin resilience. VBL management remained upbeat about the outlook for the coming quarters, too. It expects India’s volume momentum to sustain, given the favourable summer season this time (a healthy consumption trend visible in April).

In terms of raw materials, the company is well covered for the upcoming season. As a result, it does not expect any material impact on overall margins and can offset likely pressure on India margins through lower discounts and cost efficiencies. Hence, margin resilience is likely to continue, which is quite commendable, it added.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)