Varun Beverages Ltd

Price story Before the numbers, the tape. A stock price moves through four repeating seasons: a flat base (stage 1), an advance (2), a top (3), a decline (4). Where the price sits in that cycle frames everything below.

Varun Beverages Ltd trades at ₹417, in a downtrend and 4 weeks into that stage. That is −10.9% against its own 200-day average. It sits at 18% of a 52-week range of ₹389 to ₹544. On relative strength it is currently behind the NIFTY 500 on a trailing-13-week view (13 weeks and counting).

Today the stock is in a downtrend — week 4 of stage 4, confirmed. At ₹417 it trades −10.9% versus its 200-day average and sits at 18% of its 52-week range (₹389–₹544).

Against the market, two honest reads. Cumulative: over the last 9.8 years the stock moved +1,495% while the NIFTY 500 moved +230% — ahead of the index over the full window. Recent form: on a trailing-13-week view the stock is currently behind (13 weeks and counting; last ahead the week of 2026-06-24) — the ribbon below is that same metric, week by week.

What would end the trend, mechanically: two Friday closes in a row below the 200-day line. That is the exit rule — no debates.

Story check

Varun Beverages Ltd's story is not scored yet against the markers our research file set on 31 May 2026. Where it sits in its own cycle: MID_CYCLE.

Our read, 31 May 2026. India's largest PepsiCo bottler — capacity-flush with a PE contracting from 86x peak while TTM EPS builds through volume and margin compounding.

From the numbers. PE contracted 36% from Mar-2024 peak of 86x to 54.6x — now at 33rd percentile of 10-year range. The contraction is earnings-driven (EPS building, price flat-to-down). FII holding declined from 22.98% (Mar-2025) to…

From the price. Price stage 4, week 4 — below its 200-day line, relative strength falling.

From the research. India's largest PepsiCo bottler — capacity-flush with a PE contracting from 86x peak while TTM EPS builds through volume and margin compounding.

🚨 Where they disagree. PE contracted 36% from Mar-2024 peak of 86x to 54.6x — now at 33rd percentile of 10-year range. The contraction is earnings-driven (EPS building, price flat-to-down). FII holding declined from 22.98% (Mar-2025) to 19.51% (Mar-2026) — net FII selling over the past year. At 54.6x this is not classic deep-value territory, but the cycle position (NEAR_TROUGH) and earnings momentum support a case for mean-reversion toward the historical median PE of 58.7x as growth resumes.

What is proven. India's largest PepsiCo bottler — capacity-flush with a PE contracting from 86x peak while TTM EPS builds through volume and margin compounding.

What is not proven yet. 2025 was management's own characterization as the worst seasonal year on record — India volumes declined 7.1% in Q2 FY25 on abnormal rainfall; a repeat in FY26 Q2 cuts PAT 15-20% vs guidance.

The test written in advance. Weather disruption to peak-season volumes — Weather disruption to peak-season volumes India volumes in Jun-2026 quarter vs prior year — threshold for alert is <8% growth by the next result.

The test written in advance. Input cost inflation — PET resin and sugar — Input cost inflation — PET resin and sugar OPM trajectory; any quarterly OPM below 20% in a peak-season quarter (Jun or Sep) would be a material alarm by the next result.

The test written in advance. Management disclosure reliability — four documented cross-call contradictions — Management disclosure reliability — four documented cross-call contradictions Q2 FY27 concall — Carlsberg brewery status, any capex commitment clarity by the next result.

What the company does. Q1 FY27 delivered consolidated volume +16.3% (India +14.4%, International +21.4%), revenue +18.1%, PAT +20.1%. PE at 54.6x is 33rd percentile of its 10Y range — contracting from a Mar-2024 peak of 86x — while EPS trajectory has accelerated from Dec-2024 troughs. Four greenfield plants commissioned in FY25, capacity headroom for 50%+ volume growth without new India capex; EBITDA margin 23.3% with +55 bps YoY in Q1 FY27.

Lever 1 · Operating leverage — BUILDING. Four greenfield plants commissioned in FY25 plus Bevco acquisition in South Africa — sufficient capacity for 50%+ volume growth without new India investment, delivering operating leverage directly to PAT. What proves it keeps working: Operating Leverage on Capacity-Flush Base. It stops working if India volumes in Jun-2026 quarter vs prior year — threshold for alert is <8% growth.

Lever 10 · New geographies — BUILDING. International volumes +21.4% in Q1 FY27 as South Africa recovery completes, Tiza acquisition closes (~Rs 800 Cr revenue), and snack food revenues doubled YoY to Rs 112 Cr. What proves it keeps working: International Expansion — Africa Scaling. It stops working if India volumes in Jun-2026 quarter vs prior year — threshold for alert is <8% growth.

Lever 7 · Consolidation — BUILDING. Dairy growing 60-70% with 3x higher realization vs base; Tropicana PET >100%; Adrenaline Rush energy drink launched — non-CSD categories driving mix shift toward higher per-case realization. What proves it keeps working: Portfolio Premiumization — Dairy, Energy, Juice. It stops working if India volumes in Jun-2026 quarter vs prior year — threshold for alert is <8% growth.

Lever 5 · Regulatory approval — BUILDING. Interest expense declined from Rs 129 Cr (Jun-2024) to Rs 37 Cr (Jun-2025) — 71% reduction after QIP proceeds retired debt; consolidated D/E negligible. What proves it keeps working: Interest Cost Reduction / Deleveraging. It stops working if India volumes in Jun-2026 quarter vs prior year — threshold for alert is <8% growth.

Sources: our stock research file (31 May 2026) · quarterly results through Jun 26 · the company’s own earnings calls. The story check is re-scored every results season; the record below never changes.

Revenue Revenue is the top line: everything the company billed its customers in the period.

Varun Beverages Ltd reported ₹8,451 Cr of revenue in the Jun 26 quarter, +20.4% year on year. That is the 4th straight quarter of year-on-year growth. Over 10 years it has compounded at 20.4% a year. The last full year, FY25, came in at ₹21,685 Cr. The last four reported quarters add to ₹24,126 Cr.

Why this happened. South Africa is the anchor of the international story. VBL holds 17-18% market share and is growing mid-double-digits. The Bevco acquisition (3 plants, solar power, backward integrated) targets 23%+ margins within 2 years through freight and trade expense reduction. The Tiza acquisition (ZAR 2,053M) closed in Q1 FY27 and adds meaningful capacity. Snack food revenues are scaling from Rs 340 Cr in FY25 to Rs 112 Cr in Q1 FY27 alone — a trajectory toward Rs 400-450 Cr annualized. The DRC errors acknowledged in Oct-2025 have corrected, with management guiding teens growth from that market.

FY25 revenue came in at ₹21,685 Cr (+8.4% on the year), capping 10 years at 20.4% compound. The latest quarter (Jun 26) printed ₹8,451 Cr, +20.4% year on year — the 4th consecutive quarter of year-over-year growth.

Pace check: the last four quarters averaged +13.6% growth against the decade's 20.4% — the current year is running slower than its own long-run rate.

Acceleration check: trailing-twelve-month revenue grew +14.5% over the last 4 quarters against +15.6%/yr over the last 8 — stabilising; TTM profit +18.3% vs +17.5%/yr — stabilising.

Operating margin Operating margin is what is left of every ₹100 of sales after running the business, before interest and tax. It is the cleanest read on pricing power and cost control.

Varun Beverages Ltd's operating margin is 28.0% in the Jun 26 quarter, +0.0 percentage points against the same quarter a year ago. Across 12 fiscal years the operating margin has ranged 15.0% to 24.0%. The current quarter is running above every full year in that window.

Why this happened. The capacity-build phase is complete. India has four new greenfields (Prayagraj, Buxar, Damtal, Mendipathar) and management guided Rs 500-600 Cr India capex for CY2026 — down from Rs 45,000M in FY25. New plants deliver 5x throughput with same manpower, with 3-4 year payback periods. As volumes scale into this base, incremental revenue drops at higher margins. EBITDA margin sustained at 23.3% in Q1 FY27 despite new plant depreciation and lower India realization per case (mix effect from 250ml→400ml pack upsizing). The leverage arithmetic: with fixed costs spread and depreciation already baked in, each incremental volume case becomes margin-accretive.

The latest quarter's operating margin is 28.0%, +0.0 pp against the same quarter a year ago. Across 12 fiscal years the operating margin has ranged 15.0%–24.0%.

🚨 Why the margin moved: operating margin went −0.8 pp year on year while gross margin went +0.4 pp — the loss came mostly below the gross line: operating leverage, with costs spread over a bigger revenue base.

Net profit Net profit is what survives every cost, interest and tax — the number EPS, dividends and book value all grow from.

Varun Beverages Ltd earned ₹1,525 Cr of net profit in the Jun 26 quarter, +15.1% year on year. It is the 11th consecutive quarter of growth. Full-year FY25 profit was ₹3,062 Cr. The 10-year compound rate is 39.1%. That is 18.0% of the quarter's revenue. The same quarter a year earlier earned ₹1,325 Cr.

Jun 26 profit was ₹1,525 Cr, +15.1% year on year — the 11th consecutive quarter of growth. On the full year, FY25 printed ₹3,062 Cr (+16.2%), and the 10-year compound rate is 39.1%.

Why profit moved: revenue contributed +20.4% and the margin +0.0 pp — the quarter was revenue-led, with the margin roughly flat.

Pace comparison, last four quarters: profit +21.6% vs revenue +13.6%. Profit is growing faster than sales — fixed costs are being spread over a bigger base, and each extra rupee of revenue drops more to the bottom line.

Cash flow — the router The P&L says what was earned; the cash-flow statement says what actually arrived. Operating cash flow (CFO) against profit is the cleanest lie detector in the accounts.

Over the last 3 fiscal years 119% of Varun Beverages Ltd's reported profit arrived as operating cash — the cash follows the profit. In FY25 that was ₹3,509 Cr of operating cash against ₹3,062 Cr of profit. After ₹3,677 Cr of capital spending, ₹−168 Cr was left as free cash.

FY25: operating cash of ₹3,509 Cr against reported profit of ₹3,062 Cr, leaving free cash of ₹−168 Cr after ₹3,677 Cr of capital spending. Across the last 3 fiscal years the conversion rate is 119% of profit.

Cash-flow readings here are annual — that is the resolution our series carries, so this section moves once a year.

Why conversion sits at 119%: the cash cycle held roughly steady between FY20 and FY25 — so conversion tracks profitability rather than the cycle.

Router verdict: the bigger cash user is investment — capital spending ran 4.3× depreciation over three years, so the next section's job is to check what that build-out is buying.

Where the cash goes Working capital is the cash tied up between paying suppliers and getting paid: debtor days (customers owe), inventory days (stock waits), and the cash conversion cycle (the whole loop, in days of sales).

Varun Beverages Ltd's cash conversion cycle runs 79 days in FY25, up from 69 days in FY20. Capital spending ran ₹12,335 Cr over the last 3 years. At FY25 sales of ₹21,685 Cr each day of that cycle holds about ₹59.4 Cr, so roughly ₹4,693 Cr sits inside the business at any moment.

FY25: debtors at 21 days, inventory at 111 days — roughly 3.7 months of stock waiting to sell; that is where the cash sits while it waits — for a full cycle of 79 days, looser than FY20's 69.

The full loop: cash goes out to suppliers and production on day 0; stock waits 111 days to sell; customers pay about 21 days after that; and suppliers themselves are paid at 53 days — netting out to the 79-day cycle.

In money terms: at FY25 sales of ₹21,685 Cr, each day of the cycle holds about ₹59.4 Cr — so the 79-day loop keeps roughly ₹4,693 Cr sitting inside the business at any moment.

On the investment side: capital spending of ₹12,335 Cr over the last 3 fiscal years against ₹2,844 Cr of depreciation — the company is building well ahead of wear-and-tear. Capital work-in-progress stands at ₹271 Cr (FY25) — capacity paid for but not yet earning.

The synthesis: the cash is going into capacity, not disappearing into the cycle — the question becomes whether the new capacity earns.

Return on capital Return on capital employed (ROCE) is the profit the whole business earns on all the money in it — equity and debt together. It is the single best test of whether growth creates value or just size.

Varun Beverages Ltd earns a ROCE of 20% in FY25. That is up from a trough of 7% in FY14. A return-on-invested-capital spread against the cost of capital is not computable from what is held here. The wiring behind it is 14.1% net margin on 0.85× asset turns.

FY25 ROCE is 20%, recovered from a FY14 trough of 7% — the full ladder below shows the fall and the climb, undoctored.

Why the return is what it is — the wiring (FY25): 14.1% net margin × 0.85× asset turns × 1.30× balance-sheet leverage ≈ 15.6% on equity. Margin does its share; leverage is modest — this is an earned return, not a borrowed one.

The quarterly return curves and the return-on-invested-capital overlay, which only the second data source carries, are not drawn on this page: its two data sources disagree by up to 8.2% on reported income across 15 comparable periods. A figure two sources cannot agree on is not drawn — the gap is a decision, not missing data.

Debt Debt-to-equity says how much of the business is funded by borrowings; interest cover says how many times operating profit pays the interest bill. Low and high, respectively, is the safe corner.

Varun Beverages Ltd carries ₹2,508 Cr of borrowings against ₹19,578 Cr of equity in FY25, a debt-to-equity of 0.13. Operating profit covers the interest bill 26×. Over 5 years borrowings went from ₹3,216 Cr to ₹2,508 Cr. Capital spending ran ₹12,335 Cr across the last 3 of those years.

Why this happened. Distribution density compounds into volume market share. VBL and Everest formed a JV for in-house Visi-cooler manufacturing — reducing reliance on third-party supply and improving cold chain economics. The Everest Sri Lanka plant is used for South and West India territories. Industry-wide, ~1M Visi-coolers are added annually; VBL claims disproportionate market share from this infrastructure investment. Rural and semi-urban penetration are the next frontier of India volume growth.

FY25: borrowings of ₹2,508 Cr against equity of ₹19,578 Cr — a debt-to-equity of 0.13. Operating profit covers the interest bill 26×. Over 5 years borrowings went from ₹3,216 Cr to ₹2,508 Cr while capital spending ran ₹12,335 Cr in just the last 3 — the build-out is being paid for out of cash, not debt.

The total-debt and debt-to-equity series, which only the second data source carries, are not drawn on this page: its two data sources disagree by up to 8.2% on reported income across 15 comparable periods. A figure two sources cannot agree on is not drawn — the gap is a decision, not missing data.

Ownership Who owns the stock, quarter by quarter: promoters (the controlling owners), foreign and domestic institutions, and the public. Steady accumulation by people close to the numbers is a signal; a quiet register is also an answer.

Domestic institutions added 10.6 points of Varun Beverages Ltd over 8 quarters, the biggest move on the register. That takes domestic institutions to 15.2% of the company. Foreign institutions moved −6.3 points over the same window, to 19.0%. The register is read on the four disclosed classes only; nothing is inferred between filings.

The register over the last two years — Domestic institutions: +10.6 points over 8 quarters to 15.2%; Foreign institutions: −6.3 points over 8 quarters to 19.0%; Promoters: −3.2 points over 8 quarters to 59.4%.

Why the register moved: rotation — foreign institutions −6.3 points against domestic institutions +10.6 points over 8 quarters, with promoters −3.2 points — one class of institutions handing the register to the other, not a verdict change by the people closest to the numbers.

Safety line The Z-score estimates how far a company sits from balance-sheet distress — above roughly 3 is safe, below roughly 1.8 is the danger zone. It was built for manufacturers, so it is not applied to banks and lenders.

Varun Beverages Ltd: the Z-score is not available for this stock, so we say so rather than invent one. It is a distance-to-distress estimate from the balance sheet, not a forecast of failure. The debt, cash-flow and return sections above carry the balance-sheet evidence this page does hold, and each of them states its own reporting date.

Why this happened. The debt elimination is largely complete at the India level. India is net cash (Rs 12,250M) and the consolidated balance sheet carries negligible net debt. This driver is nearly fully realized — the Rs 37 Cr quarterly interest in Q1 FY27 vs Rs 129 Cr a year earlier represents a Rs 370 Cr annualized PAT benefit already captured in run-rate numbers. Going forward this driver maintains rather than accelerates.

The safety line in one sentence: the Z-score is not available for this stock, so we say so rather than invent one.

Valuation P/E is the price of ₹1 of annual profit: how many rupees the market pays for each rupee the company earns in a year.

Varun Beverages Ltd trades at 41.6× P/E, near the bottom of its own range — cheaper only 4% of the time. Its long-run median P/E is 58.1×, measured across 9.8 years of weekly readings. This places the multiple against the stock’s own record, and says nothing about what the business is worth.

Today's P/E of 41.6× is near the bottom of its own range — cheaper only 4% of the time, against a long-run median of 58.1× measured over 9.8 years of weekly readings. This is a comparison against the stock's own history — not a claim about what it is worth.

Why the multiple sits where it does: over the past year annual EPS moved +17.1% against a −11.3% price move — earnings outran the price, pushing the multiple DOWN its own range.

The price move, decomposed: over 5y, of the +27.3%/yr price move, ~+41.6%/yr came from earnings growth and ~−14.3 pp from the multiple (compressing). The split is the honest approximate (price return minus earnings growth); it makes the rally itself visible instead of hiding it behind the percentile.

Put together: the multiple is low against its own past, so the story rests on the earnings line underneath it, not the multiple.

The PEG ratio and its quarterly curve, which only the second data source carries, are not drawn on this page: its two data sources disagree by up to 8.2% on reported income across 15 comparable periods. A figure two sources cannot agree on is not drawn — the gap is a decision, not missing data.

What the price assumes This reading works the multiple backwards. It asks one question: what yearly rate of profit growth is a buyer at the market price already paying for? The number is the growth rate that makes eleven years of profit — six years growing, then five fading — add up to that day's market price, once each year is discounted at 11% a year.

Solved at its 20 July 2026 price, Varun Beverages Ltd was paying for profit growth of about 26.5% a year. Profit itself has compounded 39.1% a year over the past 10 years. Today the market pays 41.6× P/E, the 4th percentile of its own 10-year range.

What the two numbers say together. The multiple is low against its own past, and the growth the price is paying for is below what this company has actually delivered.

How to hold this number: it is a reading of one day's price, taken on 20 July 2026, not a running figure — every other number on this page, the multiple included, is read off the live quote as of 11 September 2026. A higher price is paying for more growth and a lower price for less, so it moves whenever the price does, and this page does not restate it between measurements.

Stage: Mixed Every business sits somewhere on a fundamental arc, and this page names the spot before anything else. The last twelve quarters of revenue, profit and EPS growth — plus the return the business earns on its capital — are read as curves: Deteriorating (the curves are falling), Turning around (a trough has just formed and the last few quarters lift off it), Improving (the climb off the trough is sustained), Consistent (steadily positive with healthy returns), Topping out (still high but decelerating from the peak). When the curves genuinely disagree the read is Mixed; too little history is No read. CAGR (compound annual growth rate) is the smooth yearly pace that turns the starting value into the latest one — the fairest way to compare growth across different time spans. Read the columns together: if the 1-year number towers over the 10-year, recent growth is running hotter than the long-run trend. A dash means that window is not held, or the base year was a loss (where a growth rate is not meaningful).

Varun Beverages Ltd reads as mixed on its fundamental arc. Mixed — no clean majority across the growth curves, ROCE slipping at 20.0% — the per-curve reads carry the story. The read is built from 8 quarters across 4 curves, on partial evidence.

Why it matters: when the curves disagree, the per-curve reads above matter more than any single verdict.

Return readings here are annual, not quarterly — read as level and direction only; they can confirm the growth curves but never drive the stage on their own.

A partial read: at least one curve is short, or the returns curve is not the computed quarterly series — hold the stage word a little more loosely.

4-Factor Sector Score

49.4/100 — rank 4 of 4 in FMCG - Contract Mfg · 79% evidence confidence

Varun Beverages Ltd scores 49.4 out of 100 against the 4 companies it is compared with in FMCG - Contract Mfg, ranking 4. Balanced evidence: keep at normal research priority and require another comparable period before raising conviction.

The four contributions add to the total exactly: 16.4 + 20.1 + 12.9 + 0 = 49.4. This is the SAME number shown on the sector comparison — it is computed once, for the whole peer set, and read here.

What would change it: The read weakens if profit growth turns negative or margin improvement reverses while sector-relative strength deteriorates.

Said versus delivered

What Varun Beverages Ltd's management promised, set against what actually arrived — 4 tracked promises on the record. Read straight from the company’s own earnings calls. A promise that slipped stays on this page after it is met.

Twizza Margin Expectations vs. Actual Outcome · 28 July 2026. In February 2026, management characterized Twizza as margin accretive for BevCo and expected freight and scale benefits from the acquisition. In July 2026, management instead said Twaiza was operating at lower margins and was the primary reason consolidated EBITDA margin declined by 76 basis points year-over-year, without explaining why the earlier margin-accretion expectation had not materialized.

International Inventory Level Contradiction · 27 April 2026. In the Feb 2026 call, when discussing currency benefits for international operations, management stated they 'normally carry 3-4 months of inventory' in Africa as standard operating practice. Just two months later in the April 2026 call, when asked about geopolitical raw material cost exposure, management claimed they 'normally carry six months of inventory internationally.' Both statements explicitly use 'normally' to describe this as standard practice, making this a direct factual contradiction on a key operational metric — and notably the stated buffer inflated precisely in a context where doing so would reassure investors about raw material cost risk. Earlier call (Feb 2026): “in Africa, we normally carry 3 - 4 months of inventory or even higher than that.” Later call (Apr 2026): “We normally carry six months of inventory internationally.”

Carlsberg AlcoBev Brewery Commitment Goes Silent · 27 April 2026. In the Feb 2026 call, management made a specific commitment to build a greenfield Carlsberg brewery in Africa in CY2026 (ready by end of CY2027) and explicitly cited this as a use of surplus cash — a significant shift from the Oct 2025 call where Carlsberg was framed as a distribution-only test with production decisions to follow only if testing proved successful. The April 2026 call contains zero reference to Carlsberg, the AlcoBev initiative, or the brewery in either prepared remarks or Q&A, and the CAPEX discussion makes no mention of this previously committed capital project. Later call (Apr 2026): “Our CAPEX is not going to be very large this year because we have enough capacity. We are likely going only to have one new plant, so our CAPEX will be less than 500-600 crores this year.”

Alcohol Strategy Pivot to Capex · 3 February 2026. Management previously emphasized a cautious, asset-light entry into the African beer market via imports and test marketing to minimize initial capital outlay. However, less than four months later, they have committed to immediate greenfield manufacturing, contradicting the 'test first, build later' risk mitigation strategy explicitly laid out in the prior quarter. Earlier call (Oct 2025): “Initially, it”. Later call (Feb 2026): “We are starting with Carlsberg in Africa, specifically with one plant this year. We are putting up our first greenfield plant starting this year.”

Every quote above is taken word for word from the company’s own earnings calls.

Frequently asked questions