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Varun Beverages Ltd.

This article will tell you everything you need to know before investing in VBL.

varun beverages

In this article, we will explore Varun Beverages Ltd. fundamentally, understand its business model and industry, and find out whether it’s a good investment fit for you.

Varun Beverages Ltd.

Varun Beverages Ltd is a company that is, in large part, associated with the consumer products giant PepsiCo and has been since the 1990s. VBL is a key bottling company in the beverages production industry, and is one of the largest franchises of PepsiCo globally. The company manufactures and distributes a wide range of carbonated soft drinks, including well-known names like Pepsi, Seven-Up, Mirinda, Mountain Dew, and Tropicana. The company also manufactures packaged water and other beverages for the mass consumer market.

Varun Beverages is part of the much larger RJ Group, which is the largest franchise holder for Pizza Hut, Cream Bell, and Costa Coffee in India. Currently, the company’s operations span more than 6 countries, including 3 in the Indian subcontinent, and three in Africa.

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Is the food and beverages industry a good sector to invest in?

The F&B sector in India is ripe for growth since export potential is very high. Export demand has not panned out in the market mostly because they encompass only select products. This means that while product development and innovation in the sector are low compared to other industries, there is a higher scope for value addition since processing levels in India have not yet matched global levels.

Some challenges in the industry include rapidly changing consumer preferences, inadequate large-scale manufacturing capacity, and hurdles in the smooth functioning of the supply chain. The beverage industry also remains susceptible to changes in government regulations regarding the content of soft drinks, and to increasing environmental concerns in India about groundwater depletion and discharge of effluents by bottling plants.

Varun Beverages Ltd, specifically, has a robust distribution network that covers all segments of the Indian population. The company has more than 37 state-of-the-art manufacturing facilities in India, and more than 5 internationally. It also owns more than 2,500 depots in 

Who are the competitors in the F&B sector?

Here are some of VBL’s competitors:

  • Hatsun Agro
  • Bikaji Foods
  • Zydus Wellness
  • KRBL
  • Mrs Bectors
  • L T Foods
  • Orient Beverages Ltd
  • Velox Beverages Ltd

History of Varun Beverages Ltd.

Varun Beverages was incorporated under the same name on 16th June 1995 in New Delhi as a publicly limited company under the Companies Act. By 1999, they had already started operations in Alwar, Jodhpur, and Kosi.

It was in 2015 that Varun Beverages acquired PepsiCo India’s business of manufacturing, marketing, selling and distributing soft drink beverages and syrup mix in the Indian states of Uttar Pradesh (excluding certain territories), Uttarakhand, Himachal Pradesh, Haryana (excluding certain territories) and the Union Territory of Chandigarh.

In 2019, VBL concluded the acquisition of franchise rights in South and West regions from PepsiCo for a national bottling, sales and distribution footprint in 7 States and 5 Union Territories of India. IN the way of these acquisitions, the company significantly reinforced its partnership with PepsiCo and now accounts for over 80% of India’s beverage sales volumes. This is from a little over 50% under their earlier contract.

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Investing in VBL


  • The company has delivered great profit growth numbers at more than 49% CAGR over the last 5 years
  • It has also been paying out dividends of more than 17% every year
  • Sales have also been growing, coming up to around 18% over the last 10 years
  • It is one of the top-performing stocks in the market in its category
  • During 2022, the company invested more than ₹6,300 million in various expansion projects


  • The stock seems to be overvalued, currently trading at almost 21 times its book value
  • Promoter holding has marginally decreased over the last quarter by roughly 0.5%

The finances

Market cap₹1,35,558 cr
Book value₹50
Dividend Yield0.12%
Face value₹5.00

Shareholding pattern of Varun Beverages Ltd.

Here’s the shareholding pattern of VBL:

  • Promoters: 63.09%
  • Foreign Institutional Investors (FIIs): 27.55%
  • Domestic Institutional Investors (DIIs): 3.36%
  • Public: 6.01%

It is worth noting that while promoter holding in the stock has been constant throughout, mutual fund holding in the company has been steadily decreasing throughout 2022-23, with a fall from 4.38% on June 22 to 2.22% on Sep 23. FIIs, on the other hand, have been increasing their stake throughout, with percentage levels now touching 27.5% from a little less than 24% on June 22.

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Peer multiple comparison

StockP/E RatioP/B RatioDiv. Yield
Varun Beverages Ltd90.5325.990.17%
Orient Beverages Ltd17.042.76
Velox Industries Ltd-90.431.85

In this particular case, while we can see that Varun Beverages is overpriced, we don’t have enough direct industry comparisons to back that analysis up.


So, that’s a brief overview of everything you need to know about Varun Beverages Ltd. before investing. This information is by no means, however, exhaustive, and we encourage you to do your own research before investing.

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