This Fundamentally Strong Beverage stock, engaged in producing, bottling, and distributing PepsiCo beverages like Pepsi, 7 Up, and Tropicana across India and several international markets, is in focus after the stock traded at a discount of 33 percent from its 52-week high of Rs. 682.84.
Stock Price Movement
With a market capitalization of Rs. 155,060.89 crore, the shares of Varun Beverages Limited were currently trading at Rs. 458.50 per equity share, down nearly 0.42 percent from its previous day’s close price of Rs. 460.45.
Over the past five years, the stock has provided impressive returns of more than 657.10 percent. The stock is currently trading at a discount of 32.85 percent from its 52-week high of Rs. 682.84.
Company Overview
Varun Beverages Limited (VBL) was started in 1995 and is based in Gurugram, Haryana, and is a major Indian beverage company. It is PepsiCo’s second-largest bottling partner outside the U.S. VBL makes and sells well-known drinks like Pepsi, 7 Up, Tropicana, and Aquafina. The company operates across India and in countries like Nepal, Sri Lanka, Morocco, Zambia, and Zimbabwe.
Varun Beverages has a strong business model in the beverage industry. It runs 50 state-of-the-art production facilities, 38 in India and 12 in other countries. The company also has a large distribution network with over 130 depots and more than 2,800 main distributors.
The company operates in 10 countries with franchise rights and holds distribution rights in 4 additional countries. Between 2019 and 2024, the company achieved strong growth, with its sales volume increasing at a CAGR of 18 percent.
In 2023, Varun Beverages sold 913 million cases, including 737 million in India and 176 million in international markets. By 2024, total sales rose to 1,124 million cases, with 821 million from India and 303 million from abroad. This shows strong and steady growth both in India and globally.
Capex: Varun Beverages Limited has planned a capex of Rs. 3,100 crore for CY2025, with Rs. 900 crore yet to be utilized. This investment aims to support the company’s expansion and operational growth. The detailed allocation between domestic and international markets will be shared separately, highlighting focus on both Indian and global operations.
Capacity Expansion: Varun Beverages is expanding its production capacity with new Greenfield plants already operational in Kangra (Himachal Pradesh) and Prayagraj (Uttar Pradesh). Two more plants in Bihar and Meghalaya are on track, expected to start production by May 2025. The company has also set up backward integration facilities at Prayagraj and DRC to improve supply chain efficiency and ensure smooth operations.
Additionally, Varun Beverages Limited is working with PepsiCo to launch new drinks like Jeera Masala Soda and also plans to relaunch Nimbu Masala Soda. The company is focusing on healthier choices, with 59 percent of its products now being low in sugar. This shows its commitment to offering more variety and healthier options to customers.
Target
Goldman Sachs, a prominent brokerage firm, has recommended a “Buy” call on Varun Beverages Limited with a target price of Rs. 600 per share, indicating an upside potential of 30.92 percent.
Furthermore, Motilal Oswal Financial Services Limited has also recommended a “Buy” call on Varun Beverages Limited with a target price of Rs. 665 per share, indicating an upside potential of 45.10 percent.
Financial highlights
Coming into financial highlights, Varun Beverages Limited’s revenue has increased from Rs. 4,317 crore in Q1 FY24 to Rs. 5,567 crore in Q1 FY25, which has grown by 28.96 percent. The net profit has also grown by 33.39 percent, from Rs. 548 crore in Q1 FY24 to Rs. 731 crore in Q1 FY25.
Varun Beverages Limited’s revenue and net profit have grown at a CAGR of 22.92 percent and 41.04 percent, respectively, over the last five years. In terms of return ratios, the company’s ROCE and ROE stand at 24.8 percent and 22.5 percent, respectively. Varun Beverages Limited has an earnings per share (EPS) of Rs. 8.46, and its debt-to-equity ratio is 0.17x.
Written By – Nikhil Naik
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