VBL Stock Target: Jefferies and Citi Give the FMCG Stock a Buy Call with Huge Upside Potential

Synopsis:- Brokerages maintain a ‘Buy’ stance with targets of ₹575 and ₹550, implying nearly 30% upside from ₹443.90. Q4 revenue rose 14% to ₹4,204 crore, while profit climbed 33% to ₹260 crore. OPM eased to 15%, even as global expansion and capacity additions support long-term growth momentum.

India’s other beverages sector, encompassing juices, energy drinks, bottled water, and RTD options, thrives amid rising health awareness and urbanization. In FY 2025, the broader packaged beverages market is set for steady growth at a 3.02% CAGR through 2033, building from USD 57.4 billion in 2024, fueled by demand for functional and convenient drinks. Non-alcoholic segments, including these categories, project robust expansion with an 8.16% CAGR to USD 68.73 billion by 2033. Consumers increasingly favor low-sugar, natural variants for on-the-go hydration.

With a market capitalization of Rs 1,50,447.77 crore, the shares of Varun Beverages Ltd closed at Rs 444.85 per share, decreased around 1.43 percent as compared to the previous closing price of Rs 451.30 apiece.

Brokerage Recommendations

Citi has reiterated its ‘Buy’ recommendation on this FMCG stock, though it has lowered the target price to  Rs 575. Despite the revision, the new target still suggests an upside potential of nearly 29% from the current level of  Rs 444.85 apiece, underscoring confidence in the company’s growth prospects and margin outlook.

As per the brokerage, Varun Beverages delivered a steady Q4 with consolidated revenue and EBITDA rising 14% and 7%, respectively. Domestic volumes grew 10.5%, but a 4% drop in realisations, likely due to higher consumer promotions, signals rising competitive intensity and near-term pressure on pricing power in India.

The brokerage notes that the company is sharpening its competitive strategy through selective  Rs 10 launches and a possible local-flavour Nimbooz variant by March. While realisation softness may persist in India, profitability in CY26E should remain stable if the company capitalises on strong summer demand and sustained international momentum.

Moreover, Jefferies has also maintained a ‘Buy’ rating on VBL while trimming the target price to  Rs 550. The brokerage noted healthy volume growth across India and overseas in Q4, but flagged a 4% YoY drop in India realisations as a negative surprise, attributed to higher discounts. Despite competitive pressures, management remains confident in margins and CY26 prospects.

Financials

Recently, the company announced solid Q4CY25 numbers, with revenue increasing 14% from  Rs 3,689 crore to  Rs 4,204 crore, reflecting strong business momentum. Net profit rose 33% from  Rs 196 crore to  Rs 260 crore during the same period. While earnings growth trailed revenue expansion, the overall performance indicates steady operational improvement.

Moreover, comparing the December quarters, operating performance showed mild pressure year-on-year. OPM edged down from 16% in Dec 2024 to 15% in Dec 2025. However, operating profit rose from Rs 579 crore to  Rs 637 crore, reflecting higher scale benefits even as margins saw slight compression during the period.

In CY2025, VBL accelerated its international expansion and diversification strategy. It signed an agreement to acquire 100% stake in Twizza, South Africa, at an enterprise value of ~ZAR 2,095 million, while incorporating a wholly-owned subsidiary in Kenya. The company also entered an exclusive distribution pact with Carlsberg to test beer markets across select African territories.

Additionally, VBL expanded into alcoholic beverages by amending its main object clause and strengthened snacks operations in Zimbabwe, Zambia, and Morocco. It commissioned four new greenfield plants in India and set up backward integration facilities. The acquisition of a 50% stake in Everest Industrial Lanka further enhances its refrigeration and visi-cooler manufacturing capabilities.

Varun Beverages Ltd is one of the largest franchisees of PepsiCo globally, engaged in manufacturing, bottling, and distributing a wide range of carbonated soft drinks, juices, and packaged water. The company operates across India and several international markets, supported by a strong distribution network and expanding production capacity.

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.

The post VBL Stock Target: Jefferies and Citi Give the FMCG Stock a Buy Call with Huge Upside Potential appeared first on Trade Brains.