Varun Beverages Receives 'Buy' Rating from MarketsMOJO, Showcases Strong Performance in Recent Years

Varun Beverages, a leading player in the breweries industry, has recently received a 'Buy' rating from MarketsMOJO. This upgrade comes as no surprise, considering the company's impressive performance in recent years.
One of the key factors contributing to this 'Buy' rating is Varun Beverages' high management efficiency, with a ROCE (Return on Capital Employed) of 16.50%. This indicates that the company is utilizing its capital effectively and generating good returns for its shareholders.

Moreover, Varun Beverages has shown healthy long-term growth, with its net sales growing at an annual rate of 25.73% and operating profit at 36.62%. The company has also declared positive results for the last 12 consecutive quarters, further solidifying its position in the market.

From a technical standpoint, the stock is currently in a bullish range and has shown improvement in its trend from mildly bullish to bullish on 29-Apr-24. Multiple factors such as MACD, Bollinger Band, KST, and OBV are also indicating a bullish trend for the stock.

Another positive aspect of Varun Beverages is its high institutional holdings at 29.93%. This indicates that these investors have better capability and resources to analyze the company's fundamentals, making it a favorable investment option for retail investors.

The company has also consistently delivered good returns over the last 3 years, outperforming the BSE 500 index in each of the last 3 annual periods. With a market cap of Rs 1,89,427 crore, Varun Beverages is the biggest company in the sector, constituting 51.00% of the entire industry. Its annual sales of Rs 16,042.59 crore also make up 34.74% of the industry, further highlighting its dominance in the market.

However, there are some risks associated with investing in Varun Beverages. With a ROCE of 24.6, the company has a very expensive valuation, with an enterprise value to capital employed ratio of 16.6. Additionally, the stock is currently trading at a discount compared to its average historical valuations. The PEG ratio of the company is also at 2.5, indicating that the stock may be overvalued.

In conclusion, Varun Beverages is a strong player in the breweries industry with a solid track record of performance. With its recent 'Buy' rating and consistent returns, it is definitely a stock to consider for long-term investment. However, investors should also be aware of the risks associated with the company's expensive valuation.