Varun Beverages' Q3 CY25 operating performance was below brokerage's as well as street estimates with subdued India performance and International business providing some support. India business volumes were largely flat YoY due to extended rainfall across India, while International was up by ~9% led by strong growth in South Africa.
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Yes Securities Report
We now expect Varun Beverages Ltd.'s revenue to grow at ~11% CAGR over CY24-27E ~60bps 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 and new opportunities explored for International business, gives us good visibility on medium-to-long term growth.
We maintain our Buy rating with revised target price of Rs 625 (Rs 600 earlier), as we assign a target multiple of ~49x on Sept'27E EPS.
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