The shares of the Large-cap company, which specializes in manufacturing, distributing, and selling a wide range of PepsiCo beverages, including carbonated soft drinks like Pepsi, 7UP, and Mountain Dew, as well as non-carbonated beverages such as Tropicana juices and others, are in focus following an analyst’s viewpoint on the stock after its Q2 results and Its entry into the Alcohol Business.
With a market capitalization of 1,59,173.30 Crores on Friday, the shares of Varun Beverages Ltd declined by upto 3.1 percent, reaching a low of Rs. 470.10 compared to its previous close of Rs. 485.15.
What Happened
Varun Beverages Ltd, engaged in manufacturing, distributing, and selling a wide range of PepsiCo beverages, including carbonated soft drinks like Pepsi, 7UP, and Mountain Dew, as well as non-carbonated beverages such as Tropicana juices and others, is in focus following the analyst’s viewpoint on the stock after its Q2 results, and its entry into the Alcohol Business.
The company’s Q2 results are as follows:
Its Revenue from operations rose by 2.3 percent YoY from Rs. 4,932 Crores in Q2FY25 to Rs. 5,048 Crores in Q2FY26, and it declined by 30 percent QoQ from Rs. 7,163 Crores in Q1FY26 to Rs. 5,048 Crores in Q2FY26.
Its Net Profit YoY rose by 18.4 percent from Rs. 628.8 Crores in Q2FY25 to Rs. 745.1 Crores in Q2FY26, and it declined by 43 percent QoQ from Rs. 1,325.4 Crores in Q1FY26 to Rs. 745.1 Crores in Q2FY26. The earnings per share (EPS) for the quarterly period stood at Rs. 2.19, compared to Rs. 3.89 in the previous quarter.
Varun Beverages enters the liquor market
New Company in Kenya
Varun Beverages Limited (VBL) is establishing a new wholly-owned subsidiary in Kenya, which will locally produce, distribute, and sell the company’s beverages, thus facilitating the company’s expansion in Africa.
Tie-up with Carlsberg for Beer Sales
VBL’s African subsidiaries have entered into an exclusive contract with Carlsberg Breweries to sell Carlsberg beer in their markets. Faced with the growing demand for ready-to-drink and alcoholic beverages, VBL is also considering a move into this segment by covering the production of beer, wine, whisky, rum, vodka, and the like, in India as well as internationally.
Brokerage Viewpoint
Nuvama Institutional Equities
The brokerage maintained its ‘Buy’ rating on VBL but lowered the target price from ₹606 to ₹595, citing rising competition and adverse weather as key concerns highlighted by PepsiCo. Reliance Consumer has gained double-digit market share in key states, while Tata Consumer’s RTD volumes are expected to grow 19% YoY.
Although October saw strong double-digit growth, a harsher winter could weigh on demand. The brokerage cut its CY25–27E EPS estimates by about 5%.
Motilal Oswal Financial Services
Motilal Oswal Financial Services maintained its ‘Buy’ rating on VBL with a target price of ₹580, noting the company’s expanded memorandum to include manufacturing and trading of RTD and alcoholic beverages in India and abroad. MOFSL expects this move, along with growth in international markets led by South Africa, to boost earnings.
It also highlighted improved execution in India, the upcoming scale-up of the snacking business from CY26, operationalisation of Morocco and Zimbabwe plants in H2CY25, portfolio expansion through ‘Adrenaline Rush,’ and continued investments in capacity, distribution, and cold chain infrastructure.
Axis Securities
Axis Securities maintained its ‘Buy’ rating on VBL with a target price of ₹565, citing its pilot tie-up with Carlsberg Breweries A/S in Southern Africa. The exclusive distribution agreement leverages VBL’s existing infrastructure and favourable regulations, allowing cost-efficient expansion without significant new investment.
The measured entry into the alcoholic beverage segment aligns with its growth strategy, and Axis expects sustained momentum over the medium to long term, valuing the stock at 38x September 2027 EPS.
Emkay Global Financial Services
Emkay Global Financial Services maintained its ‘Buy’ rating on VBL with a target price of ₹575, noting that the company’s double-digit volume growth continued in October 2025, easing concerns over market-share loss.
Management remains focused on protecting share, even at key ₹10 price points if required. Growth is being driven by differentiated segments such as hydration and dairy, which grew 50–100% and face limited competition. Emkay remains confident of VBL’s continued outperformance versus FMCG peers.
ICICI Securities
ICICI Securities maintained its ‘Hold’ rating on VBL, raising the target price to ₹500 from ₹450. It said the partnerships with Carlsberg and Everest International broaden VBL’s long-term growth prospects.
However, the brokerage cut its CY25–26E estimates by 6%, factoring in revenue, EBITDA, and net profit CAGR of 12%, 12%, and 18%, respectively, over CY24–27E. It remains cautious but takes comfort in management’s confidence, supported by low per-capita consumption, capacity expansion, and diversified international presence.
Company Overview & Others
Varun Beverages Ltd (VBL) is a large Indian beverage company that operates as one of the world’s largest franchisees for PepsiCo (outside of the USA), manufacturing and distributing its carbonated and non-carbonated drinks across India and other international markets.
The company produces a wide range of popular brands, including Pepsi, Mountain Dew, 7UP, Mirinda, Tropicana, and Aquafina, with a significant distribution network serving millions of outlets. VBL is publicly listed on the NSE and BSE and is a major player in the Fast-Moving Consumer Goods (FMCG) sector
VBL has demonstrated a strong financial performance, with a robust Return on Capital Employed (ROCE) of 24.8% and a healthy Return on Equity (ROE) of 22.5%, indicating efficient capital utilization and strong shareholder value creation.
The company’s PEG ratio of 0.97 suggests that its growth potential remains attractively valued relative to earnings, while a low debt-to-equity ratio of 0.12 highlights its prudent capital structure and conservative leverage management.
Over the past five years, VBL has delivered an impressive profit growth CAGR of 41.4%, reflecting strong operational efficiency and sustained demand momentum. Additionally, a 3-year average ROE of 28.2% showcases the company’s ability to generate superior returns consistently. The 10-year median sales growth of 24.7% further underscores VBL’s long-term track record of expansion and market leadership.
Written by Sridhar J
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