One of the large-cap stocks engaged in manufacturing, bottling, and distributing carbonated and non-carbonated beverages has dropped by almost 18 percent in this calendar year 2025. This article explains the possible reasons behind the company’s share price decline.
Stock Price Movement
In Friday’s trading session, Varun Beverages Limited’s shares plunged by 4.07 percent from the previous close of Rs. 574.40. The stock opened at Rs. 580.75 and is currently trading at Rs. 551, with a high of Rs. 580.75 and a low of Rs. 545.40.
The market capitalization now stands at approximately Rs. 1,86,321.20 crore. The stock is currently trading below 19.10 percent from its 52-week high.
Company Overview
Varun Beverages Limited (VBL) is a prominent player in the beverage industry and the second-largest franchisee of PepsiCo globally, outside the United States. The company operates extensively across India, covering 27 states and 7 union territories, and has an international footprint in countries like Nepal, Sri Lanka, Morocco, Zambia, and Zimbabwe.
The company offers a wide range of beverages, including carbonated drinks like Pepsi, 7up, Mirinda, and Mountain Dew, non-carbonated options like Tropicana juice and Aquafina water, and dairy products such as Cream Bell Milkshakes, catering to diverse consumer tastes.
What is the news?
Varun Beverages Limited’s stock P/E ratio of 72.9 is nearly double the industry average of 32.7, which raised concerns among investors. This high P/E led to profit booking, causing the stock price to fall by almost 18 percent since the start of the year. Investors have been selling off shares, fearing overvaluation and reduced growth potential in the near future.
Another reason for the share price decline is the seasonal drop in beverage consumption during winter. With colder weather, people tend to drink fewer beverages, leading to a decrease in revenue for the company in the upcoming quarter.
Additionally, the management’s guidance of a slower growth rate in the second half of the financial year 2025 has added to the bearish sentiment surrounding the stock.
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Heatmap of the Varun Beverages
Capacity Expansion
Varun Beverages Limited plans to double its production capacity in the Democratic Republic of Congo (DRC), with total capacity projected to exceed 70 million cases by next year, significantly boosting its market presence.
New Products and Innovations
Varun Beverages Limited plans to introduce new products like Jeera Masala Soda in collaboration with PepsiCo and relaunch Nimbu Masala Soda. The company also focuses on low-sugar options, with 49 percent of its portfolio being low-sugar.
Strategic Initiatives
Varun Beverages Limited has a current net debt of more than Rs. 6,000 crore and plans to reduce it using proceeds from a Rs. 7,500 crore Qualified Institutional Placement (QIP). The company aims to maintain a debt-to-equity ratio of 1.0x for future acquisitions.
Additionally, it is focusing on expanding its snack business in Africa, recognizing the region’s growth potential.
Recent quarter results
Varun Beverages Limited’s revenue has increased from Rs. 3,871 crore in Q2 FY24 to Rs. 4,805 crore in Q2 FY25, which has grown by 24.13 percent. The net profit has also grown by 22.37 percent, from Rs. 514 crore in Q2 FY24 to Rs. 629 crore in Q2 FY25.
Written By – Nikhil Naik
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