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Motilal Oswal Report
Varun Beverages Ltd. has a diversified growth strategy, with multiple levers in place to drive its long-term growth. We expect volume growth momentum to continue, with:
a gradual gain in market share on increasing penetration in underpenetrated markets,
higher acceptance of recently launched products, and
ramp-up of operations in new regions (South and West India).
Varun Beverages has maintained its positive free cash flow for the last eight years, with an average annual run-rate of Rs 3.3 billion over CY14-21. With no major capex and expansion plan in the near term, the management is looking to improve its cash flows and reduce debt.
We expect the company to generate a free-cash-flow of Rs 26.7 billion over CY22-23. Its overall debt should reduce to Rs 9.9 billion in CY23E from Rs 33.4 billion in CY21.
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