Varun Beverages shares fall as much as 5% on CNBC-TV18 report of potential GST rate tweaks

Shares of Varun Beverages Ltd., one of the largest bottling partners of food and beverage giant PepsiCo Ltd., declined by as much as 5% in Tuesday's trading session.

The sharp fall in the stock price followed a CNBC-TV18 reported about potential rate rationalisation in the upcoming GST council meeting.

CNBC-TV18 reported on December 2 that the Group of Ministers (GoM) have decided to propose a 35% special GST rate on aerated drinks, along with Tobacco and Tobacco products.

The sources further said that the 35% rate will be over and above the existing four slab structure of 5%, 12%, 18% and 28%.

The GoM report is expected to be discussed at the upcoming 55th GST Council meeting in Jaisalmer, where the Council will deliberate and decide whether to accept or reject the proposals.

Finance Minister Nirmala Sitharaman has called reports of recommendations by the GoM premature and speculative and said that the GST Council will make the final decision; the GoM is only a recommendatory body.

For Varun Beverages, most of its revenue comes from aerated beverages.

Shares of Varun Beverages have risen 3% in one month. In six months too, it has gained only 4%. On the other hand, the stock has recovered 42% from its 52-week low of ₹422.20.

In terms of technicals, the relative strength index (RSI) of Varun Beverages stood at 58, signaling the stock is trading neither in the overbought nor in the oversold zone. The counter has a one-year beta of 0.7, indicating very low volatility during the same period.

Varun Beverages shares are trading higher than the 5 day, 10 day, 20 day, 30 day, 50 day, 100 day, 150 day and 200 day moving averages.

Brokerage firms Emkay and Axis Securities have 'Buy' ratings on the stock, with price targets of ₹750 per share and ₹700 per share, respectively.

Shares of Varun Beverages Ltd. are currently trading 3.17% lower at ₹612.20. The stock has jumped about 25% so far this year.