Varun Beverages' Q2 CY25 performance was a mixed bag as India volumes took a hit while overall margin surprised us positively (EM up 80 basis points YoY).
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We now expect Varun Beverages Ltd.'s revenue to grow at ~13% CAGR over CY24-27E ~60 basis points Ebitda margin improvement largely driven by scale, efficiencies, channel mix improvement and backward integration.
Pro-active capacity additions in domestic as well as international businesses along with long runway for distribution expansion, gives us good visibility on medium-to-long term growth.
We maintain our Buy rating with revised target price of Rs 600 (Rs 625 earlier), as we assign a target multiple of ~50 times on March'27E earnings per share.
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