Varun Beverages Hits A Sweet Spot: SEBI RAs Spot Bullish Pattern, Breakout Potential After Robust Q1 Earnings

The analysts highlighted the company’s solid fundamentals, credit rating upgrade, and a bullish technical setup, pointing to potential upside.

Varun Beverages gained nearly 3% on Wednesday after it reported strong first-quarter (Q1) results, driven by volume growth and international expansion.

SEBI-registered analysts Adarsh Nimborkar and Palak Jain shared their insights on the company’s fundamentals and technical setup following the earnings release.

The company posted a 28.9% year-on-year increase in consolidated revenue to ₹5,566.9 crore and a 17.6% rise in standalone revenue to ₹4,052.5 crore. 

Total sales volume grew 30.1% to 312.4 million cases, supported by robust domestic demand and contributions from South Africa and the Democratic Republic of Congo. Organic volume growth in India stood at 15.5%.

Core profit rose 27.8% to ₹1,263.96 crore, while net profit jumped 33.5% to ₹731.36 crore. 

Margins remained largely stable despite a slight dip in core profit margin due to the integration of lower-margin overseas businesses. 

Earnings per share (EPS) was ₹2.15, narrowly missing estimates of ₹2.16. Gross margin declined 171 basis points to 54.6%, mainly due to product and geographic mix changes.

Depreciation increased 45% following the commissioning of three new plants at Supa, Gorakhpur, and Khordha. Finance costs remained low domestically, aided by ₹10.8 crore in interest income offsetting lease-related borrowing costs abroad. 

CRISIL upgraded the company’s long-term credit rating to AAA (Stable), citing strong financial health and debt management.

Nimborkar noted the stock is trading near a resistance level of ₹518, with a breakout potentially leading to further upside. A pullback to ₹498 could offer a support zone. 

He advised investors to watch volume and closing price action near these levels for confirmation.

Meanwhile, Jain added that the stock has formed a bullish "cup and handle" pattern, supported by strong volumes and recent price momentum. 

She identified the resistance level as a key hurdle, with a breakout signaling a possible upward move and a potential buying opportunity.

On Stocktwits, retail sentiment was ‘bullish’ amid ‘high’ message volume.

Varun Beverages’ stock has declined/risen xx% so far in 2025.

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