'Buy' Varun Beverages Maintains Motilal Oswal Factoring In Strong Fundamentals, Potential For Future Growth

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Motilal Oswal Report

Despite facing short-term headwinds from unfavorable weather and weakened consumption trends, Varun Beverages Ltd. achieved ~12%/23% YoY volume growth in the domestic market/consolidated basis, driven by deeper market penetration. Revenue/Ebitda increased 28%/31%, with Ebitda margins expanding 100 basis points to 23.5% in CY24.

Varun Beverages expanded its manufacturing footprint with a total capex of Rs 26 billion, commissioning three new greenfield facilities in Supa (Maharashtra), Gorakhpur (Uttar Pradesh), and Khordha (Odisha) in India.

Additionally, the company invested Rs 6 billion in a new greenfield facility in the Democratic Republic of Congo.

Varun Beverages’ aggressive international expansion, particularly in Africa, was a key highlight, further strengthening its presence in high-growth markets.

The company entered into share purchase agreements to acquire PepsiCo’s businesses in Tanzania and Ghana, further reinforcing its footprint in East and West Africa.

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