Varun Beverages receives 'Hold' rating from MarketsMOJO due to strong management efficiency and institutional confidence, with potential for future growth.

Varun Beverages, a leading player in the breweries and distilleries industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes as a result of the company's high management efficiency, with a ROCE (Return on Capital Employed) of 16.50%.
The company has also shown healthy long-term growth, with its net sales growing at an annual rate of 23.18% and operating profit at 36.62%. This has led to the stock being in a mildly bullish range, with technical trends improving from mildly bearish on 29-Oct-24. The MACD and Bollinger Band technical factors are also bullish, indicating a positive outlook for the stock.

One of the key factors contributing to the 'Hold' rating is the high institutional holdings at 29.16%. These investors have better capability and resources to analyze the fundamentals of companies, making their confidence in Varun Beverages a positive sign for retail investors.

The company has consistently delivered strong 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 1,96,058 crore, Varun Beverages is the biggest company in the sector, constituting 47.57% of the entire industry. Its annual sales of Rs 18,986.54 crore make up 34.69% of the industry, further solidifying its position as a market leader.

However, the company's results for Sep 24 have been flat, with interest growing at 48.01% and ROCE at its lowest at 23.42%. The debt-equity ratio is also at its highest at 0.79 times. With a ROCE of 23.5, the stock is currently trading at a very expensive valuation with a 13.7 enterprise value to capital employed. However, it is still trading at a discount compared to its average historical valuations.

Despite the recent flat results, Varun Beverages has shown strong growth in the past year, with a return of 65.19% and profits rising by 27.2%. The PEG ratio of the company is 2.9, indicating a slightly expensive valuation. Overall, the 'Hold' rating from MarketsMOJO suggests a neutral stance on the stock, with potential for future growth.