The shares of the Massive-cap firm, which focuses on manufacturing, distributing, and promoting a variety of PepsiCo drinks, together with carbonated smooth drinks like Pepsi, 7UP, and Mountain Dew, in addition to non-carbonated drinks reminiscent of Tropicana juices and others, are in focus following an analyst’s viewpoint on the inventory after its Q2 outcomes and Its entry into the Alcohol Enterprise.
With a market capitalization of 1,59,173.30 Crores on Friday, the shares of Varun Drinks Ltd declined by upto 3.1 p.c, reaching a low of Rs. 470.10 in comparison with its earlier shut of Rs. 485.15.
What Occurred
Varun Drinks Ltd, engaged in manufacturing, distributing, and promoting a variety of PepsiCo drinks, together with carbonated smooth drinks like Pepsi, 7UP, and Mountain Dew, in addition to non-carbonated drinks reminiscent of Tropicana juices and others, is in focus following the analyst’s viewpoint on the inventory after its Q2 outcomes, and its entry into the Alcohol Enterprise.
The corporate’s Q2 outcomes are as follows:
Its Income from operations rose by 2.3 p.c YoY from Rs. 4,932 Crores in Q2FY25 to Rs. 5,048 Crores in Q2FY26, and it declined by 30 p.c QoQ from Rs. 7,163 Crores in Q1FY26 to Rs. 5,048 Crores in Q2FY26.
Its Web Revenue YoY rose by 18.4 p.c from Rs. 628.8 Crores in Q2FY25 to Rs. 745.1 Crores in Q2FY26, and it declined by 43 p.c QoQ from Rs. 1,325.4 Crores in Q1FY26 to Rs. 745.1 Crores in Q2FY26. The earnings per share (EPS) for the quarterly interval stood at Rs. 2.19, in comparison with Rs. 3.89 within the earlier quarter.
Varun Drinks enters the liquor market
New Firm in Kenya
Varun Drinks Restricted (VBL) is establishing a brand new wholly-owned subsidiary in Kenya, which can regionally produce, distribute, and promote the corporate’s drinks, thus facilitating the corporate’s enlargement in Africa.
Tie-up with Carlsberg for Beer Gross sales
VBL’s African subsidiaries have entered into an unique contract with Carlsberg Breweries to promote Carlsberg beer of their markets. Confronted with the rising demand for ready-to-drink and alcoholic drinks, VBL can be contemplating a transfer into this phase by masking the manufacturing of beer, wine, whisky, rum, vodka, and the like, in India in addition to internationally.
Brokerage Viewpoint
Nuvama Institutional Equities
The brokerage maintained its ‘Purchase’ ranking on VBL however lowered the goal worth from ₹606 to ₹595, citing rising competitors and hostile climate as key considerations highlighted by PepsiCo. Reliance Client has gained double-digit market share in key states, whereas Tata Client’s RTD volumes are anticipated to develop 19% YoY.
Though October noticed robust double-digit development, a harsher winter may weigh on demand. The brokerage reduce its CY25–27E EPS estimates by about 5%.
Motilal Oswal Monetary Providers
Motilal Oswal Monetary Providers maintained its ‘Purchase’ ranking on VBL with a goal worth of ₹580, noting the corporate’s expanded memorandum to incorporate manufacturing and buying and selling of RTD and alcoholic drinks in India and overseas. MOFSL expects this transfer, together with development in worldwide markets led by South Africa, to spice up earnings.
It additionally highlighted improved execution in India, the upcoming scale-up of the snacking enterprise from CY26, operationalisation of Morocco and Zimbabwe vegetation in H2CY25, portfolio enlargement by way of ‘Adrenaline Rush,’ and continued investments in capability, distribution, and chilly chain infrastructure.
Axis Securities
Axis Securities maintained its ‘Purchase’ ranking on VBL with a goal worth of ₹565, citing its pilot tie-up with Carlsberg Breweries A/S in Southern Africa. The unique distribution settlement leverages VBL’s present infrastructure and beneficial rules, permitting cost-efficient enlargement with out important new funding.
The measured entry into the alcoholic beverage phase aligns with its development technique, and Axis expects sustained momentum over the medium to long run, valuing the inventory at 38x September 2027 EPS.
Emkay International Monetary Providers
Emkay International Monetary Providers maintained its ‘Purchase’ ranking on VBL with a goal worth of ₹575, noting that the corporate’s double-digit quantity development continued in October 2025, easing considerations over market-share loss.
Administration stays centered on defending share, even at key ₹10 worth factors if required. Progress is being pushed by differentiated segments reminiscent of hydration and dairy, which grew 50–100% and face restricted competitors. Emkay stays assured of VBL’s continued outperformance versus FMCG friends.
ICICI Securities
ICICI Securities maintained its ‘Maintain’ ranking on VBL, elevating the goal worth to ₹500 from ₹450. It stated the partnerships with Carlsberg and Everest Worldwide broaden VBL’s long-term development prospects.
Nevertheless, the brokerage reduce its CY25–26E estimates by 6%, factoring in income, EBITDA, and web revenue CAGR of 12%, 12%, and 18%, respectively, over CY24–27E. It stays cautious however takes consolation in administration’s confidence, supported by low per-capita consumption, capability enlargement, and diversified worldwide presence.
Firm Overview & Others
Varun Drinks Ltd (VBL) is a big Indian beverage firm that operates as one of many world’s largest franchisees for PepsiCo (outdoors of the USA), manufacturing and distributing its carbonated and non-carbonated drinks throughout India and different worldwide markets.
The corporate produces a variety of widespread manufacturers, together with Pepsi, Mountain Dew, 7UP, Mirinda, Tropicana, and Aquafina, with a big distribution community serving tens of millions of retailers. VBL is publicly listed on the NSE and BSE and is a significant participant within the Quick-Transferring Client Items (FMCG) sector
VBL has demonstrated a robust monetary efficiency, with a sturdy Return on Capital Employed (ROCE) of 24.8% and a wholesome Return on Fairness (ROE) of twenty-two.5%, indicating environment friendly capital utilization and powerful shareholder worth creation.
The corporate’s PEG ratio of 0.97 means that its development potential stays attractively valued relative to earnings, whereas a low debt-to-equity ratio of 0.12 highlights its prudent capital construction and conservative leverage administration.
Over the previous 5 years, VBL has delivered a powerful revenue development CAGR of 41.4%, reflecting robust operational effectivity and sustained demand momentum. Moreover, a 3-year common ROE of 28.2% showcases the corporate’s means to generate superior returns constantly. The ten-year median gross sales development of 24.7% additional underscores VBL’s long-term observe file of enlargement and market management.
Written by Sridhar J
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