Varun Beverages Ltd. share price target

Varun Beverages demonstrated resilient financial results in Q4CY25, supported by robust volume growth and improved realisations despite earlier weather-related disruptions. The planned acquisition in South Africa is expected to strengthen manufacturing capabilities and deepen distribution networks, unlocking further synergies. The company's focus on operational efficiency and strategic investments, with moderated capital expenditure (capex) requirements in India and focused...

CY25 was a subdued year for Varun Beverages Limited (VBL), as unusually heavy rainfall led to weak beverage consumption, resulting in modest volume growth of 8% in the consolidated business and 2% in India, with realizations remaining largely flat.

We recommend a BUY with a target price of Rs 500/share, implying an upside of 10% from the CMP.

Varun Beverages (VBL) has been one of the fastest-growing domestic FMCG companies, registering a revenue CAGR of 20% over the last 10 years.

We maintain our BUY recommendation on the stock.

VBL has acquired 100% stake in Twizza (Pty), which manufactures and distributes own branded NARTD beverages in South Africa. With this acquisition, VBL’s volume market share is set to increase to ~20% in the geography by CY27E (vs ~10% now).

We expect valuation multiples to remain firm in the near term, supported by VBL’s market leadership, strong profitability profile, and visibility on double-digit earnings growth.

With a 14% upside potential from the CMP, we maintain our BUY rating on the stock.

Management remains optimistic about sustaining growth momentum, supported by robust international performance and a recovery in domestic demand as weather conditions normalize.

3QCY25 was a muted quarter for Varun Beverages (VBL) as its revenue grew only ~2% YoY due to prolonged monsoon across India.

International markets grew 15.1% YoY, led by 16.1% YoY growth in South Africa, on strong currency movement and commissioning of new can line in Durban. EBITDA grew 0.4% YoY to Rs. 1,999cr and margin expanded 75bps YoY to 27.9%, on newer, high-efficiency lines and strong currency in international operations. The company delivered a resilient performance driven by robust execution, *over or under performance to benchmark index expanded distribution and operational ramp-up of new plants. The management is focused on strategic international expansion, backward integration, snack...

Revenue from operations net of excise and GST stood at the level of Rs. 70,174 million in Q2 CY2025, down 2.5% YoY. For H1 CY25, revenue grew by 9.3% to Rs. 125,843 million.

In Q2CY25, consolidated revenue stood at INR 70,174 Mn., down 2.5% YoY (+26.1% QoQ), sharply below our estimates, as the overall volumes were impacted by early onset of monsoons and erratic rain patterns in India.

With a 15% upside potential from the CMP, we maintain our BUY rating on the stock.

Despite rising competitive intensity and lower volumes, Varun Beverages (VBL) delivered better-than-expected Q2CY25 profitability due to better control on overheads and favourable currency movement in the Africa market.

2QCY25 was a muted quarter for Varun Beverages (VBL) as its revenue declined 2% YoY due to the early onset of monsoon in the peak summer months of India.

With a 25% upside potential from the CMP, we maintain our BUY rating on the stock.

VBL reported a strong and largely in-line quarter. India revenue growth was better at ~18% (vs expectation of ~15%), helped by ~16%/2% growth in volume/realization.

Quarterly Update Q1CY25