Varun Beverages, a major player in the breweries and distilleries sector, has been downgraded to a “Sell” rating by MarketsMojo as of January 21, 2025, due to its flat financial results for Q2 FY24-25. Despite a 48.01% increase in interest to Rs 247.70 crore, the company’s return on capital employed (ROCE) has fallen to 23.42%, and its debt-equity ratio has risen to 0.79 times. The promoter stake has decreased to 60.2%.
Although Varun Beverages reported a 27.2% profit increase year-over-year, its valuation appears expensive with an enterprise value to capital employed ratio of 12.7. The company’s technical trend also indicates a sideways movement, suggesting a lack of clear price momentum.
Varun Beverages remains the largest entity in its sector, accounting for 45.35% of the industry and annual sales of Rs 18,986.54 crore, representing 33.99% of the sector’s total. However, its recent financial performance and valuation metrics suggest that it may not be a good investment opportunity at present.