Varun Beverages Ltd. (VBL) AI Stock Analysis

• Market Cap: ₹1.56T
• Dividend Yield: 0.33%
• Average Volume (3M): 496.51K
• Price to Earnings (P/E): 54.3
• Beta (1Y): 1.16
• Revenue Growth: 16.76%
• EPS Growth: 13.96%
• Country: IN
• Employees: 11,041
• Sector: Consumer Defensive
• Sector Strength: 42
• Industry: Beverages - Non-Alcoholic
• EPS (TTM): 2.20
• Shares Outstanding: 3,381,961,200
• 10 Day Avg. Volume: 186,454
• 30 Day Avg. Volume: 496,512
• PEG Ratio: 3.14
• Price to Book (P/B): 12.55
• Price to Sales (P/S): 10.17
• P/FCF Ratio: -523.70
• 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: ₹567.67
• Price Target Upside: 14.58% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

• Rating: 71 Outperform
• Price Target: ₹547.00 ▲(10.40% 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.

Varun Beverages Ltd. Business Overview & Revenue Model

Company Description

Varun Beverages Ltd. (VBL) is one of the largest franchisee bottlers of PepsiCo in the world, primarily operating in the non-alcoholic beverages sector. Founded in 1995, the company has a wide portfolio of products, including carbonated soft drinks, fruit juices, and packaged drinking water. VBL operates in various geographical regions, predominantly in India, Nepal, and Sri Lanka, and is known for its strong distribution network and manufacturing capabilities.

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 are concerns. Cash flow challenges due to high capital investments persist, but strong operating cash flow is maintained.

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	162.73B	200.08B	160.43B	131.73B	88.23B	64.50B
Gross Profit	89.33B	111.03B	86.38B	69.12B	47.89B	36.86B
EBITDA	40.34B	48.31B	37.47B	28.27B	16.62B	12.11B
Net Income	22.29B	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: 495.45
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• 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 495.45 is above the 20-day moving average (MA) of 451.81, above the 50-day MA of 470.15, and below the 200-day MA of 496.51, indicating a neutral trend. The MACD of 1.70 indicates Negative momentum. The RSI at 68.43 is Neutral, neither overbought nor oversold. The STOCH value of 66.03 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	―	₹1.56T	54.28	―	0.33%	16.76%	13.96%
TATACONSUM	―	₹1.15T	86.64	―	0.71%	14.09%	13.85%
MARICO	―	₹944.05B	57.02	―	1.45%	16.58%	9.72%
DABUR	―	₹902.10B	50.61	―	1.58%	-0.03%	-5.22%
BRITANNIA	―	₹1.46T	66.76	―	1.28%	7.68%	0.27%
NESTLEIND	―	₹2.49T	84.22	―	0.95%	6.25%	-8.80%
Sector *	―	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%

Varun Beverages Ltd. Corporate Events

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.

Varun Beverages Expands into Snack Category Amid Resilient Q2 Performance

Varun Beverages Ltd. reported a resilient financial performance for the second quarter and half-year ending June 30, 2025, despite challenges posed by early monsoon rains in India. The company maintained its EBITDA margins and realizations per case, supported by growth in international markets and favorable currency movements in Africa. Notably, the commencement of Cheetos production in Morocco marks a strategic expansion into the snack category, enhancing its product portfolio and diversifying revenue streams.