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Analysts Have Made A Financial Statement On Varun Beverages Limited's (NSE:VBL) Third-Quarter Report
Shareholders might have noticed that Varun Beverages Limited (NSE:VBL) filed its third-quarter result this time last week. The early response was not positive, with shares down 2.7% to ₹397 in the past week. The results were positive, with revenue coming in at ₹66b, beating analyst expectations by 8.4%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus from Varun Beverages' 27 analysts is for revenues of ₹298.7b in 2027. This would reflect a notable 16% increase on its revenue over the past 12 months. Per-share earnings are expected to step up 14% to ₹11.67. Before this earnings report, the analysts had been forecasting revenues of ₹288.6b and earnings per share (EPS) of ₹11.64 in 2027. So it looks like there's been no major change in sentiment following the latest results, although the analysts have made a small lift in to revenue forecasts.
See our latest analysis for Varun Beverages
It may not be a surprise to see thatthe analysts have reconfirmed their price target of ₹531, implying that the uplift in revenue is not expected to greatly contribute to Varun Beverages's valuation in the near term. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Varun Beverages analyst has a price target of ₹657 per share, while the most pessimistic values it at ₹400. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Varun Beverages shareholders.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Varun Beverages' revenue growth will slow down substantially, with revenues to the end of 2027 expected to display 12% growth on an annualised basis. This is compared to a historical growth rate of 19% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 11% annually. So it's pretty clear that, while Varun Beverages' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Varun Beverages going out to 2028, and you can see them free on our platform here..
You can also see whether Varun Beverages is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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