A 22% correction in Varun Beverages shares in 2025 is a buying opportunity, DAM Capital says

Brokerage firm DAM Capital has reiterated its 'Buy' recommendation on Varun Beverages Ltd., one of the largest bottling partners of food and beverage giant PepsiCo Ltd.

The brokerage has a price target of ₹670 per share on the stock, suggesting a potential upside of 32% from its previous closing price.

The brokerage believes the recent stock price correction offers an attractive buying opportunity for investors looking for sustainable earnings growth and market leadership in the fast-growing beverage sector.

DAM Capital wrote in its note that an extended and more intense summer, along with a 20% year-on-year capacity expansion, is expected to drive strong near-term demand acceleration.

The brokerage expects Varun Beverages to achieve a 19% compound annual growth rate (CAGR) in sales over CY24-26E. This growth is expected to be driven primarily by a 16% increase in sales volume during the same period.

Additionally, DAM Capital said that the company's earnings per share (EPS) may grow at a faster pace, with a 26% CAGR, reflecting improved profitability and operational efficiency.

CLSA has recently upgraded its rating on Varun Beverages to a "high conviction outperform" and projected an upside of close to 70%.

The brokerage had mentioned that the risk-reward for the stock is very compelling even assuming an impact due to rising competition within the beverage market.

Of the 26 analysts that track Varun Beverages, 23 have a 'Buy' rating and three others have a 'Hold' rating.

Shares of Varun Beverages Ltd. settled 4.02% higher on Monday at ₹507.75. The stock has declined 22% so far in 2025 and is down 25% from its peak of ₹681.12 per share.

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