Varun Beverages Shares Experience a Dip, Yet Long-Term Trajectory Remains Upbeat

In a notable turn during Thursday's trading session, shares of Varun Beverages Ltd. (VBL) saw a 2.03% decline, attracting investor attention. The stock closed the day at Rs 1,489.15 on the National Stock Exchange, marking a fall from its previous close of Rs 1,519.90. Throughout the trading day, VBL's shares navigated a range, touching a high of Rs 1,515.00 and dipping to a low of Rs 1,482.00.

This particular dip occurred on a day when the broader Indian markets displayed modest gains.

The BSE Sensex managed to climb 157.06 points, or 0.21%, to settle at 73,812.98, while the NSE Nifty also advanced by 48.05 points, or 0.22%, closing at 22,402.40. This suggests that the decline in Varun Beverages shares was likely specific to the stock rather than a reflection of a wider market downturn.

Despite this short-term setback, Varun Beverages has been a remarkable performer for its shareholders.

The stock has delivered an impressive 35.53% return year-to-date in 2024, showcasing robust growth in just a few months. Looking back over the past 12 months, the company's shares have surged by a staggering 100.82%, highlighting its strong upward momentum and investor confidence over a longer horizon.

A closer look at the technical indicators provides a deeper understanding of the stock's current standing.

With a beta value of 1.05, VBL's shares exhibit moderate volatility relative to the overall market. The Relative Strength Index (RSI) stands at 50.15, suggesting a neutral position, indicating neither an overbought nor an oversold condition. While the Moving Average Convergence Divergence (MACD) is currently positioned above its signal line, it remains below the centre line, which could hint at a short-term bearish bias.

However, a more optimistic picture emerges from its Exponential Moving Averages (EMAs), as the stock is trading above its 5-day, 10-day, 20-day, 50-day, 100-day, and 200-day EMAs, which is typically considered a strong bullish signal for its long-term trend.

From a fundamental perspective, Varun Beverages commands a significant market capitalization of Rs 193498.05 crore, establishing it as a major player in its sector.

The stock currently trades at a Price-to-Earnings (P/E) ratio of 78.93, with an Earnings Per Share (EPS) of Rs 19.12 (TTM). Its Price-to-Book (P/B) ratio is 22.01, and the company offers a modest dividend yield of 0.05% on a face value of Rs 1.00 per share.

The company's recent financial performance further reinforces its strong operational health.

For the fourth quarter ending December 2023, Varun Beverages reported a robust 20.6% year-on-year increase in sales. Even more impressively, its net profit for the same period surged by a significant 55.4% year-on-year. These strong underlying fundamentals provide a solid foundation, suggesting that any short-term stock price fluctuations are part of its natural market movements rather than indicative of fundamental weakness.