Broker's call: Varun Beverages (Buy)

Updated on: Nov 27, 2021

HDFC Securities

Varun Beverages (Buy)

Target: ₹999

CMP: ₹883.75

Varun Beverages (VBL) is part of RJ Corp group and is PepsiCo’s second largest franchisee (outside US) of carbonated soft drinks (CSD) and non-carbonated beverages (NCBs).

A strategic franchisee partner of PepsiCo in India, VBL over three decades has developed a significant and mutually beneficial business association.

Its share of PepsiCo India’s beverages volume sales has increased from 26 per cent in FY11 to over 85 per cent now. Besides India, it has been granted franchise rights for other South Asian and African countries.

With end-to-end execution capabilities and presence across the entire beverage value chain, the company’s profile is not restricted to being just a bottler. VBL’s vast operational experience, widespread integrated distribution network and in-depth market knowledge lends significant value to the distribution and sale of PepsiCo products in India. With PepsiCo’s best-in class portfolio (Pepsi, Mirinda, Mountain Dew, 7 Up, Tropicana, Aquafina, etc), VBL is well placed to cater to changing consumer preferences. India’s young population, rising on-the-go consumption, and improving retail network (with rapid electrification across country) offer a multi-billion-dollar opportunity for the beverages manufacturers.

Published on November 26, 2021

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