Varun Beverages shares are in focus after the strong ‘Overweight’ recommendation from Morgan Stanley. One of the largest bottling partners of PepsiCo outside the US, Morgan Stanley has set a target price of Rs 600 for the stock. This implies an upside of 21.5% for the next 12 months. Morgan Stanley stated that “we believe the share price will rise in absolute terms over the next 45 days.”
Varun Beverages: Morgan Stanley optimistic about 2026 outlook
The brokerage is confident that management will provide strong commentary in the upcoming quarterly earnings. “We think management commentary during Q4CY25 earnings could suggest an optimistic 2026 outlook for the India business,” read the report.
This, along with management’s focus on portfolio expansion in existing markets, including the opportunity for expansion into the business of RTD & Alcoholic Beverages, augurs well for medium-term growth and should support stock outperformance. According to Morgan Stanley, “We estimate that there is about an 80%+ (or ‘highly likely’) probability for the scenario.”
As per Morgan Stanley’s estimates, Varun Beverages currently trades at a 12-month forward P/E of 47x, lower than its 3-year historical average of 54x.
Varun Beverages Q2 FY26
Varun Beverages’ net profit in the second quarter of FY26 came in at Rs 1,317 crore, up 5% year-over-year from Rs 1,253 crore in the same period a year ago. The company’s revenue rose by 2.5% YoY to Rs 7,017.4 crore in Q2 FY26 from the same period a year ago. The company’s Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) stood flat at Rs 1,999.6 crore.
The company’s India volumes declined by 7.1%, while international volumes grew by 15.1% (South Africa growing at 16.1%), which partially offset the overall decline. The consolidated sales volume declined by 3% in Q2.
Varun Beverages share price performance
The stock price of Varun Beverages has risen 2% in the last five trading sessions. The stock has delivered a return of 6.75% in the past one month and 8% over the last six months. However, Varun Beverages’ stock price has wiped out 18.88% in the previous one year.