Varun Beverages Ltd. share price target

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.

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.

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

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

CY24 was a transformative year for Varun Beverages Limited (VBL), marked by strong growth, global expansion, and unwavering sustainability commitments.

We initiate coverage on Varun Beverages Ltd. with a “BUY” rating. We like the company for its demonstrated execution capabilities in India, further headroom for distribution expansion in India, continued territorial expansion in Africa, international margin improvement and strengthening ties with PepsiCo.

We maintain our BUY rating on the stock.

Varun Beverages (VBL) reported a revenue growth of 38% YoY in 4QCY24, led by volume growth of 38% YoY, which was majorly driven by the volume addition from South Africa and the Democratic Republic of Congo (DRC).

VBL's long-term outlook remains positive and with 23% upside potential from CMP we maintain a BUY rating on the stock.

VBL has approved SPA to acquire 100% stake in SBCT/SBCG, which own manufacturing/distribution rights for NARTD beverages in Tanzania and Ghana.

With an 18% upside potential from the CMP, we maintain our BUY rating on the stock

Takeaways: (1) Varun (VBL) has aggressively ramped up production (operating at maximum utilisation) at its recently commissioned DRC facility, due to strong demand. It plans to scale up production capacity at DRC in a phased manner.

Quarterly Update Q3CY24