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. The stock has consolidated and made a reversal from its previous low of 565 levels and seems headed to 640 levels on back of following points. * VBL announced acquisition of SBC Beverages, PepsiCo’s bottler in Tanzania & Ghana. • Acquisition would add 5% to VBL’s EBITDA and would be marginally EPS accretive. • We expect EPS to grow by 24.2% in CY25E & by 20.9% in CY26E. • Stock is currently trading at 48.3x P/E CY25E earnings. * Acquisition in line with VBL ambition to judiciously tap into Africa opportunity. • We see value creation opportunity (share gain + margin expansion + optionality). • Also approved acquisition of balance 39.93% stake in subsidiary Lunarmech Technologies. • PepsiCo enjoys 56%/13% share in Tanzania/Ghana.

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