Morgan Stanley Turns Bullish on Varun Beverages with ‘Overweight’ Call, 21.5% Upside Seen

Varun Beverages is in the spotlight after Morgan Stanley reiterated an ‘Overweight’ rating with a revised target price of ₹600, implying a 21.5% upside over the next 12 months. The brokerage expects the stock to rise in absolute terms within the next 45 days, driven by positive earnings momentum and strong growth prospects. The bullish stance follows confidence in management’s upcoming Q4 CY25 earnings commentary, which Morgan Stanley believes will signal an optimistic outlook for its India business in 2026. The firm also highlights long-term potential from expansion into Ready-to-Drink (RTD) and alcoholic beverages, assigning over 80% probability to successful diversification. Currently trading at a forward P/E of 47x, the stock is below its 3-year average of 54x, offering relative valuation comfort. In Q2 FY26, Varun Beverages posted revenue of ₹7,017.4 crore (+2.5% YoY) and net profit of ₹1,317 crore (+5% YoY), though EBITDA remained flat at ₹1,999.6 crore. While India volumes declined 7.1%, robust international growth (+15.1%), led by South Africa (+16.1%), cushioned the impact, with consolidated volumes down just 3%. With portfolio diversification, improving international performance, and favorable valuations, Varun Beverages appears well-positioned for medium-term outperformance, according to Morgan Stanley.