Varun Beverages
Rural distribution + Africa
- Last close
- ₹430.00
- 29 Sept 2026 · reference
- 1D · 1M
- 0.0% · +3.9%
- price-only
- Weight
- 1.0%
- 31 Jul 2026 · Aug rank —
- Thesis review
- 8 Sep 2026
- Why We Own, p35
Approved description
World's second-largest PepsiCo franchise bottler (outside the US) producing and distributing Pepsi, 7Up, Mountain Dew, Sting, Tropicana, Aquafina etc. across India (~90% of PepsiCo India beverage volumes) and 10+ international markets (Nepal, Sri Lanka, Morocco, Zambia, Zimbabwe, DRC, South Africa via BevCo and the 2026 Twizza acquisition, Ghana, Tanzania). Sold 466.7 mn cases in Q2CY26 alone; CY25 revenue Rs 21,685 cr, EBITDA margin ~23%; India is net-debt-free. Adjacent snacks manufacturing for PepsiCo in Morocco/Zimbabwe and value-added dairy are new legs. Market share vs Coca-Cola/Campa not quantified in sources used.
- 01Volume compounder: consolidated volumes +19.8% in Q2CY26 (India +14.4%) after +16.3% in Q1CY26; management sees no reason India growth cannot stay double-digit; 10-yr sales CAGR 20%.
- 02Distribution and capacity flywheel: plans to add 0.5 mn outlets in CY26 (vs 0.3-0.4 mn historically); H1CY26 capex Rs 950 cr on brownfield lines, dairy, Zimbabwe snacks and Rs 400 cr of coolers/market infrastructure; WIP Rs 490 cr for South Africa and a Kenya CSD line.
- 03International optionality: Twizza (South Africa, Rs 1,131 cr EV) and Crickley Dairy/BevCo (Rs 131 cr EV) take VBL into higher-growth African markets; international volume +38.4% in Q2CY26 with all African markets except Zambia growing at a healthy pace.
- 04Margin resilience: 27.7% Q2 EBITDA margin and 55% gross margin (+44 bps) despite PET/sugar inflation; India EBITDA margin still expanding (+38 bps) and India is net-debt-free (consolidated net debt only Rs 371 cr at Jun-26).
- 05Valuation at 40.6x trailing / ~34x CY27E (derived) with 16% earnings CAGR is cheaper than Nestle India (73x) and Tata Consumer (61x) for faster growth; brokerage targets Rs 500-657 imply 23-62% upside.
Reference close, with results-period markers
- 1Q Sep-25 end · 30 Sept 2025
- 2Q Dec-25 end · 31 Dec 2025
- 3Q Mar-26 end · 31 Mar 2026
- 4Q Jun-26 end · 30 Jun 2026
Quality score, technicals and Buoyant Score
Computing the scorecard…
Latest quarter · Q Jun-26
| Line (₹ cr) | Q Jun-26 | YoY | QoQ |
|---|---|---|---|
| Net Sales | 8,651 | +20.8% | +28.7% |
| Operating Profit | 2,343 | +17.2% | +53.2% |
| Net Profit | 1,521 | +15.5% | +74.4% |
Reported vs internal estimate: internal quarterly estimates are not in the supplied package; consensus feed not licensed. YoY/QoQ per PRD §12.5 (transitions, not %, on non-positive bases).
Position and valuation context
General industrial/consumer/IT preset: growth, margins, ROCE/ROIC, working capital, FCF, net debt; P/E, EV/EBITDA.
Sell-side targets are third-party views, not Buoyant's; the upside is recomputed on our reference close, so it differs from the figure printed at the broker's price date.
Valuation range
No headline target on this page; the book quotes the thesis and the risk rather than a target.
What we watch
- Q3CY26 results (late Oct-2026): monsoon-quarter India volume and first full quarter of Twizza; any upgrade to CY26 volume guidance from MOFSL's 16% CAGR.
- Commissioning of South Africa expansion and Kenya CSD line (WIP Rs 490 cr) plus Zimbabwe snacks plant in H2CY26 - adds international capacity ahead of the Southern Hemisphere summer.
- PepsiCo India portfolio moves (energy drinks/Sting extensions, value-added dairy line) and potential inclusion in more index/ESG portfolios (ESG rating raised to 63 for FY26).
- Weather/seasonality: April-June is the peak quarter (Q2 ~35% of CY revenue); an early or extended monsoon (as in CY25) or unseasonal rain can wipe out a year's growth - Q2 revenue was below the Rs 8,631 cr estimate (TradingView).
- Campa/Reliance price war at Rs 10 and PepsiCo concentrate-price/franchise terms; margin dilution from lower-margin African acquisitions (Twizza cut consolidated margin 76 bps).
- Promoter holding fell 4.18% over three years to 59.4% (QIP and stake sales); ROE has halved from 29% (CY23) to 20% (CY25) as equity base expanded - Buoyant's FY27e ROE is only 16.6%.