Varun Beverages Share Price

Fundamental analysis of Varun Beverages Ltd.

Fundamental analysis is essential to understand if you should invest in a particular stock. In this article, we will cover the fundamental analysis of Varun Beverages Ltd. and look at the Varun Beverages share price!

Varun Beverages Ltd.

Varun Beverages Ltd. (VBL) is a critical player in the beverage industry, established on June 15, 1995, in New Delhi as a public limited company. It commenced its operations in Jaipur in 1996, and today, it has 34 manufacturing plants in India and 6 international manufacturing plants!

The global headquarters of VBL is situated in Gurgaon, and over the years, this company has gained a significant market share. Varun Beverages is one of the largest franchises of PepsiCo in the world if you exclude the USA.

VBL has been associated with PepsiCo since the 1990s and is responsible for manufacturing and distributing various products. Over the past two and a half decades, VBL has consolidated this association, expanded its distribution network, and introduced various SKUs to its portfolio.

In India, VBL has been granted franchises in 27 states and 7 union territories, and it is responsible for producing and distributing about 90% of the total volume of PepsiCo beverages consumed in India.

Should you invest in the FMCG sector?

Beverages are a part of the FMCG sector. FMCG (Fast Moving Consumer Goods) is the fourth largest sector in the Indian economy and features an extensive range of high-turnover products that are produced and consumed quickly. This implies that the products manufactured by this sector are always in ever-green demand.

Experts have also predicted that the demand for FMCG products will keep increasing in the coming years. In fact, this industry is anticipated to grow at a CAGR of 14.9% and scale up from $167 billion in 2023 to $220 billion in 2025.

This industry has been one of the most dynamic and resilient sectors in the economy despite various challenges, such as demonetisation and the COVID-19 pandemic. Varun Beverages, a key player in this sector, has experienced a rapid and promising growth trajectory.

It has been acquiring new territories for its operations, so its market penetration will only increase over the years. Coupled with the fact that refrigeration systems are now reaching both semi-rural and rural areas, these products are also likely to experience a boom in demand in these regions, and therefore, it may be an excellent decision to keep an eye on this sector’s companies.

Who Are Varun Beverages’ competitors in the FMCG industry?

Below is a list of a few of Varun Beverages' competitors in the FMCG sector.

• Nestlé
• Britannia Industries
• ITC Foods
• Jubilant FoodWorks
• Hatsun Agro Product
• Haldiram
• Tata Consumer Products

History of Varun Beverages Ltd.

• Incorporation: Varun Beverages was established on 15th June 1995 in New Delhi as a public limited company in accordance with the Companies Act, 1956.
• Product range: VBL offers an extensive range of products, such as Pepsi, Sting, Mountain Dew, Evervess, Tropicana Slice, Seven-Up Nimbooz, Gatorade, Aquafina, and Creambell.
• Infrastructure: VBL has 40 production facilities, out of which 34 are based in India, while the remaining 6 are spread across various countries.
• Certifications: VBL has earned various certifications in its different plants over the years. In 2010, VBL obtained the ISO 14001: 2004 certificate for its production facility at Jainpur and in 2013, it received the FSSC 22000:2010 certification for its production facility in Greater Noida I.
• Awards and recognitions: VBL bagged multiple accolades such as the “PepsiCo’s International Bottler of the Year 2022” and “Business Brand Award for Best Corporate Governance – 2022”. Additionally, it has also earned recognition for upholding various quality standards and was presented with the “Golden Peacock National Quality Award – 2022”.

Company Profile of Varun Beverages Ltd.

Pros

• Extensive geographical reach. VBL has operations based in different countries; hence, it is less vulnerable to economic fluctuations in any country.
• Efficient cash conversion cycle. Varun Beverages Ltd. has a cash conversion cycle of 14.99 days, which means that the company can effectively meet its financial obligations and ensure smooth operation.
• Growth in share price. Varun Beverages share price today is over Rs. 1500+, with a 95.36% return over the past year. Therefore, it is one of the most lucrative investments. Additionally, the Varun beverages share price target for 2025 is Rs 1,785.
• Healthy ROE. VBL has maintained a healthy ROE of 21.83% over the past three years.

Cons

• High P/E ratio. VBL is trading at a high P/E ratio of 107.43, which is greater than many of its peers’ P/E ratios in the same sector.
• Seasonal demand. Many of the products manufactured by Varun Beverages Ltd., such as carbonated drinks, have seasonal demand. These products experience a surge in demand in the summer and a low demand in the winter.
• Restricted product portfolio. Unlike many of its competitors, VBL has a limited product portfolio dominated by carbonated drinks.

The finances

The table below lists some of the key financial metrics of Varun Beverages Ltd. taken as of June 2024.

Shareholding Pattern of Varun Beverages Ltd.

The shareholding pattern of this FMCG company has been listed below, taken as of June 2024:

• Promoters: Hold 62.91%
• Foreign Institutional Investors (FII): 25.78%
• Domestic Institutional Investors (DII): 4.15%
• Public: 7.16%

Peer multiple comparison

To better understand how Varun Beverages is performing in the FMCG sector, let’s look at some of its peers in the market and evaluate them against some key metrics.