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Motilal Oswal Report
Africa has emerged as Varun Beverages Ltd.'s next scalable growth engine, evolving from a franchise-led presence into a structurally important international platform. With domestic PepsiCo seeing modest growth, Africa offers a compelling mix of size and growth across CSDs, snacks, and now alcobev.
Strategic moves such as the BevCo acquisition, greenfield investments, and entry into snacks have built a strong manufacturing and distribution backbone. The recent Carlsberg partnership and Twizza acquisition mark the second phase of expansion, unlocking portfolio depth, operating leverage, and cost efficiencies. This Africa-led growth is set to meaningfully drive diversification, earnings momentum, and mid-term growth.
For India, Varun Beverages' disciplined strategy prioritizes sustainable growth over aggressive pricing. By focusing on innovation, portfolio optimization, and selective market interventions, the company is well-positioned to deliver strong volume growth while maintaining healthy margins in CY26.
With sufficient capacity and a premiumisation-focused portfolio, Varun Beverages demonstrates resilience against competitive pressures while preserving long-term profitability.
The brokerage expect a CAGR of 13%/13%/16% in revenue/Eb itda/PAT over CY25-27. We value the stock at 45x CY27E EPS to arrive at a target price of Rs 550. Hence reiterates Buy rating on the stock.
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