On 19 Nov 2025, the company’s score grade experienced a call change, reflecting a shift in its technical grade from mildly bearish to bearish. This technical adjustment is a significant factor influencing the overall evaluation of Varun Beverages, a leading player in the beverages sector with a market capitalisation of ₹1,54,692 crores. The stock closed at ₹457.40 on the trigger date, down 0.93% from the previous close of ₹461.70.
Examining the technical parameters in detail, the Moving Average Convergence Divergence (MACD) indicator presents a mixed picture: mildly bullish on a weekly basis but mildly bearish monthly. The Relative Strength Index (RSI) shows no clear signal on both weekly and monthly charts, while Bollinger Bands indicate bearish trends consistently across weekly and monthly timeframes. Daily moving averages also align with a bearish outlook. The Know Sure Thing (KST) indicator is bearish weekly and mildly bearish monthly, whereas Dow Theory and On-Balance Volume (OBV) indicators show no definitive trend. These technical signals collectively suggest a cautious stance on the stock’s price momentum.
From a valuation perspective, Varun Beverages exhibits a high Price to Book (P/B) ratio of 8.4, indicating a valuation level that is considered very expensive relative to its book value. The company’s Return on Equity (ROE) stands at 15.5%, which, when combined with the elevated P/B ratio, suggests that the stock is priced at a premium compared to its peers. However, it is noteworthy that the stock currently trades at a discount relative to the average historical valuations of its sector peers, providing some context to its valuation stance.
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Financially, Varun Beverages reported flat performance in the second quarter of the fiscal year 2025-26, with Return on Capital Employed (ROCE) at 19.85% for the half-year period, marking the lowest level observed recently. Despite this, the company’s profits have shown a year-on-year rise of 16.9%, even as the stock’s price return over the last year was negative at -25.06%. This contrasts with the broader market, where the BSE500 index generated returns of 8.30% over the same period, highlighting the stock’s underperformance relative to the market benchmark.
Long-term financial trends present a more favourable outlook. Varun Beverages has demonstrated strong fundamental strength with an average ROE of 22.82% over an extended period. Net sales have grown at an annualised rate of 27.27%, while operating profit has expanded at 44.29% annually. The company’s debt servicing capability remains robust, with a low Debt to EBITDA ratio of 0.88 times, indicating manageable leverage levels.
Institutional investors hold a significant stake in Varun Beverages, with 33.72% ownership. This group increased its holdings by 1.34% in the previous quarter, signalling continued confidence from investors with advanced analytical resources. The company’s dominant position in the beverages sector is underscored by its market capitalisation constituting 39.37% of the sector’s total, and its annual sales of ₹21,169.75 crores representing 33.96% of the industry’s revenue.
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When analysing returns, Varun Beverages has delivered mixed results over different time horizons. The stock’s five-year return stands at an impressive 572.65%, significantly outperforming the Sensex’s 91.65% over the same period. Similarly, the three-year return of 99.86% surpasses the Sensex’s 37.31%. However, recent performance has been less favourable, with one-year and year-to-date returns at -25.06% and -28.36% respectively, compared to Sensex returns of 9.48% and 8.36%. Shorter-term returns also reflect this trend, with the stock declining by 2.77% over the past week while the Sensex gained 0.96%.
Technically, the stock’s 52-week price range spans from ₹419.40 to ₹663.70, with the current price near the lower end of this range. The day’s trading saw a high of ₹460.60 and a low of ₹454.05, indicating limited intraday volatility. These price movements, combined with the technical indicators, suggest a cautious market sentiment towards Varun Beverages at present.
In summary, the revision in Varun Beverages’ investment evaluation reflects a nuanced balance of factors. The technical indicators have shifted towards a more bearish stance, while valuation metrics highlight a premium pricing environment. Financial trends show flat recent performance but strong long-term fundamentals and growth rates. Institutional interest remains robust, underscoring confidence in the company’s strategic position within the beverages sector. Investors analysing Varun Beverages should consider these multiple dimensions in the context of their portfolio objectives and risk tolerance.
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