Varun Beverages Ltd. (VBL) AI Stock Analysis

• Market Cap: ₹1.65T
• Dividend Yield: 0.31%
• Average Volume (3M): 496.51K
• Price to Earnings (P/E): 55.7
• Beta (1Y): 1.25
• Revenue Growth: 11.50%
• EPS Growth: 12.21%
• Country: IN
• Employees: 11,041
• Sector: Consumer Defensive
• Sector Strength: 42
• Industry: Beverages - Non-Alcoholic
• EPS (TTM): 2.20
• Shares Outstanding: 3,381,988,800
• 10 Day Avg. Volume: 186,454
• 30 Day Avg. Volume: 496,512
• PEG Ratio: 3.14
• Price to Book (P/B): 12.56
• Price to Sales (P/S): 10.43
• P/FCF Ratio: -524.36
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: ₹560.00
• Price Target Upside: 9.84% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 71 Outperform
• Price Target: ₹547.00 ▲(7.29% Upside)

Varun Beverages Ltd. demonstrates strong financial performance with robust revenue growth and profitability, though high leverage and cash flow challenges are concerns. Technical indicators show positive momentum but caution is advised due to overbought signals. The high P/E ratio suggests potential overvaluation, and the low dividend yield offers limited income.

Positive Factors

Operating Cash Flow

Strong operating cash flow ensures liquidity and the ability to reinvest in growth opportunities, supporting sustainable operations.

Market Expansion

Expanding into emerging markets can provide new revenue streams and reduce dependency on existing markets, enhancing resilience.

Revenue Growth

Consistent revenue growth indicates strong market demand and effective sales strategies, supporting long-term business expansion.

Negative Factors

Operational Margin Pressure

Pressure on operational margins can affect profitability, requiring cost management improvements to maintain financial health.

Negative Free Cash Flow

Negative free cash flow limits financial flexibility and may constrain the company's ability to pursue new investments or reduce debt.

High Leverage

High leverage increases financial risk, potentially impacting the company's ability to finance operations and invest in growth.

Varun Beverages Ltd. Business Overview & Revenue Model

Company Description

Varun Beverages Limited, together with its subsidiaries, operates as the franchisee of carbonated soft drinks (CSDs) and non-carbonated beverages (NCBs) sold under trademarks owned by PepsiCo. The company manufactures, bottles, distributes, and sells a range of CSDs under the Pepsi, Diet Pepsi, Seven-Up, Mirinda Orange, Mirinda Lemon, Mountain Dew, Seven-Up Nimbooz Masala Soda, Evervess Soda, Duke's Soda, Sting, Pepsi Black, Mountain Dew Ice, Slice Fizzy, and Teem brands. It also produces and distributes NCBs under the of Tropicana Slice, Tropicana Juices, Seven-Up Nimbooz, Gatorade, and Quaker Oats Milk brand names, as well as packaged drinking water under the Aquafina and Aquavess brand names. In addition, the company holds the franchise for Ole brand of PepsiCo products in Sri Lanka. It sells its products to retail outlets directly and through distributors in India, as well as territories of Nepal, Sri Lanka, Morocco, Zambia, and Zimbabwe. The company was incorporated in 1995 and is based in Gurugram, India. Varun Beverages Limited is a subsidiary of RJ Corp Limited.

How the Company Makes Money

Varun Beverages Ltd. generates revenue primarily through the sale of its beverage products, which include well-known brands such as Pepsi, Mountain Dew, Tropicana, and Aquafina. The company operates on a franchise model, where it holds exclusive rights to manufacture and distribute PepsiCo products in certain regions. Key revenue streams include sales from carbonated soft drinks, non-carbonated beverages, and packaged water. VBL benefits from significant economies of scale, efficient production processes, and strong relationships with retailers and distributors, allowing for extensive market reach. Additionally, strategic partnerships with PepsiCo enhance its product offerings and brand recognition, thereby driving sales growth.

Varun Beverages Ltd. Financial Statement Overview

Summary

Varun Beverages Ltd. shows strong revenue growth and profitability with solid margins. However, operational margin pressures and high leverage pose risks. Despite cash flow challenges due to capital investments, the company maintains strong operating cash flow.

Income Statement

Varun Beverages Ltd. has demonstrated consistent growth in revenue, with a notable increase from 2023 to 2024. The gross profit and net profit margins have shown healthy figures, indicating efficient cost management. However, the decline in EBIT margin from 2023 suggests potential pressure on operational efficiency. Overall, the income statement reflects strong financial performance with a solid upward revenue trajectory.

Balance Sheet

The balance sheet of Varun Beverages Ltd. shows a strong equity position with a growing equity ratio. However, the company has a relatively high debt-to-equity ratio, which could pose a risk if not managed properly. The return on equity is robust, reflecting effective use of shareholders' funds. Despite high leverage, the stability in equity growth is promising.

Cash Flow

The cash flow statement reveals challenges with negative free cash flow in recent years, indicating high capital expenditures. The operating cash flow remains strong, though the free cash flow to net income ratio is concerning. While the company manages to maintain positive operating cash flow, the significant capital investments are impacting free cash flow negatively.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	210.78B	200.08B	160.43B	131.73B	88.23B	64.50B
Gross Profit	116.01B	111.03B	86.38B	69.12B	47.89B	36.86B
EBITDA	50.89B	48.31B	37.47B	28.27B	16.62B	12.11B
Net Income	28.48B	25.95B	20.56B	14.97B	6.94B	3.29B
Balance Sheet
Total Assets	247.16B	231.44B	151.87B	116.18B	95.82B	84.58B
Cash, Cash Equivalents and Short-Term Investments	32.08B	24.50B	4.60B	2.85B	1.51B	1.05B
Total Debt	21.38B	28.26B	54.31B	38.84B	33.87B	32.41B
Total Liabilities	62.09B	64.04B	81.03B	64.03B	53.85B	48.70B
Stockholders Equity	183.63B	166.10B	69.36B	51.02B	40.80B	35.24B
Cash Flow
Free Cash Flow	0.00	-3.98B	-8.73B	-109.63M	2.89B	4.52B
Operating Cash Flow	0.00	33.81B	23.91B	17.90B	12.31B	10.12B
Investing Cash Flow	0.00	-43.17B	-32.90B	-17.05B	-10.11B	-4.71B
Financing Cash Flow	0.00	29.54B	9.85B	-179.42M	-1.78B	-5.74B

Varun Beverages Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 509.85
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IN:VBL, the sentiment is Positive. The current price of 509.85 is above the 20-day moving average (MA) of 485.29, above the 50-day MA of 474.63, and above the 200-day MA of 484.57, indicating a bullish trend. The MACD of 7.00 indicates Negative momentum. The RSI at 52.99 is Neutral, neither overbought nor oversold. The STOCH value of 62.56 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for IN:VBL.

Varun Beverages Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
VBL	71 Outperform	₹1.65T	55.67	―	0.31%	11.50%	12.21%
TATACONSUM	71 Outperform	₹1.16T	85.38	―	0.70%	15.34%	14.67%
MARICO	69 Neutral	₹978.37B	58.60	―	1.42%	22.56%	4.73%
BRITANNIA	69 Neutral	₹1.44T	62.15	―	1.24%	7.21%	8.68%
NESTLEIND	68 Neutral	₹2.50T	84.87	―	0.97%	6.25%	-8.80%
DABUR	66 Neutral	₹926.22B	51.18	―	1.62%	2.68%	1.07%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%

Varun Beverages Ltd. Corporate Events

Varun Beverages Enhances Corporate Guarantee for South African Subsidiary

Varun Beverages Ltd. has increased the corporate guarantee it provides on behalf of its South African subsidiary, The Beverage Company Proprietary Limited (Bevco), to support the latter’s borrowing arrangements. The guarantee in favour of FirstRand Bank Limited, acting through its Rand Merchant Bank division, has been raised from ZAR 1,500 million to ZAR 2,970 million and is valid until July 31, 2031, securing Bevco’s credit facility while the company states there is no direct impact on its own financial position and that the transaction is at arm’s length with no promoter group interest involved.

Varun Beverages to Buy South Africa’s Twizza for ZAR 2.1 Billion to Deepen Market Presence

Varun Beverages’ board has approved the acquisition of 100% of South Africa-based Twizza Proprietary Limited, a non-alcoholic beverage manufacturer and distributor, for an enterprise value of ZAR 2,095 million (about INR 11,187 million), to be executed in cash through its South African subsidiary Bevco, subject to regulatory clearances by competition authorities in South Africa, Botswana and Eswatini. The deal, targeted for completion by June 30, 2026, will make Twizza a step-down subsidiary and significantly deepen Varun Beverages’ presence in the South African market by adding three manufacturing facilities with integrated preform and closure lines, enhancing its production capacity, local footprint and competitive positioning in the regional soft drinks segment.

Varun Beverages Weighs Full Acquisition of South Africa’s Twizza

Varun Beverages has informed stock exchanges that its South African subsidiary, The Beverages Company Proprietary Limited, has presented to the board a proposal to acquire 100% of the share capital of Twizza Proprietary Limited. The proposed transaction, currently at the board presentation stage, signals Varun Beverages’ intention to expand its presence in the South African soft drinks market and could strengthen its regional portfolio and competitive position, although detailed financial terms and operational plans have not yet been disclosed.

Varun Beverages Ltd. Alters Memorandum of Association

Varun Beverages Ltd. announced that the proposed resolution to alter the Object Clause of its Memorandum of Association has been approved by a requisite majority through a postal ballot. This development signifies a strategic shift in the company’s operational framework, potentially impacting its market positioning and stakeholder interests. The voting results and the scrutinizer’s report have been made available on the company’s and the National Securities Depository Limited’s websites.

Varun Beverages Expands into Kenya with New Subsidiary

Varun Beverages Ltd. has established a wholly-owned subsidiary in Kenya named VBL Industries (Kenya) Limited to expand its operations in the manufacturing, distribution, and sale of beverages. This strategic move is expected to enhance the company’s market presence in the African region, potentially increasing its market share and operational footprint, thereby benefiting stakeholders through potential growth opportunities.

Varun Beverages Acquires Stake in Solar Power Firm

Varun Beverages Ltd. has acquired a 26% equity share in Jager Renewables Two Private Limited, a company focused on generating and supplying solar power in Rajasthan. This strategic investment aims to secure solar power for Varun Beverages’ captive consumption, reflecting the company’s commitment to sustainable energy solutions.