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Motilal Oswal Report
Varun Beverages Ltd. is transitioning from a pure-play beverage bottler into a broader consumer distribution platform, according to Motilal Oswal. The brokerage notes that the company is leveraging its extensive distribution network to foray into multiple product categories, strengthening its long-term growth profile.
Motilal Oswal highlights Varun Beverages's partnership with the Carlsberg Group as a key strategic development, signalling a potential entry into the beer segment in select African markets. Additionally, the company's move to establish visicooler manufacturing capacity reflects deeper vertical integration and enhanced control over its cold-chain infrastructure.
The brokerage adds that Varun Beverages continues to expand its portfolio through new product launches and is augmenting capacity with four new plants in India. International operations are emerging as a significant growth driver, with overseas markets contributing around 31% of volumes in CY25, up from 21% in CY20.
While growth in CY25 remained relatively muted, Motilal Oswal notes that the company delivered stable margins and strong cash generation. Backed by ongoing capacity expansion, portfolio innovation, and distribution-led growth, Varun Beverages remains well-positioned for sustained long-term expansion.
Motilal Oswal estimates a revenue, Ebitda, and PAT CAGR of 13%, 13%, and 16%, respectively, over CY25–27. The brokerage reiterates its Buy rating on the stock and values Varun Beverages at 45x CY27E EPS, arriving at a target price of Rs 550.
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