Mar'25 View on Varun Beverages Ltd

Varun Beverages Ltd has been associated with PepsiCo since the 1990s and is a key player in beverage industry and one of the largest franchisee of PepsiCo in the world. The company produces and distributes a wide range of carbonated soft drinks, non-carbonated drinks and packaged water sold under trademarks owned by PepsiCo. PepsiCo brands produced and sold by the company include Pepsi, Seven-up, Mirinda Orange, Mountain Dew, Tropicana Juices and many more. After making high of 675 and low of 420, the stock is lying at 490 level and looks to scale back above 600 based on following positive inputs. • VBL reported 38% yoy growth in revenues to Rs36.9 bn (1.4% beat). • Growth led by 38% volume growth (+10.3% organic growth; 1.1% beat). • VBL expects most countries in Africa to grow in Double digit. • VBL is eyeing 1-3 new product launches this summer. • VBL reported 4.8%/8% organic volume growth in India/International business. • Management indicated that it has not seen any perceivable impact of Campa yet. • Reiterated guidance of Double volume growth in India. • We expect EPS to grow by 30.4% in CY25E & by 13.5% in CY26E. • Stock is currently trading at 48.2x P/E CY26E earnings. • We maintain estimates and FV at Rs585, valuing VBL at 50X March 2027E PE.