Varun Beverages Limited

Consumer Defensive — Beverages - Non-Alcoholic · NSE

₹430.50+₹1.25 (+0.29%)

DalalBaazaar Score

74 / 100

🟢 Good

Verdict

REASONABLE

Risk

Low

No individual risk factor stands out on this snapshot.

In simple words: Strong business and financial position, with both sales and profits growing well. Valuation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:09 pm

Mixed / neutral. No major red flags jump out, but nothing here screams "obviously cheap" either. This is a name that needs a peer comparison and a view on near-term earnings triggers before sizing a position.

Understanding the Business

Company site ↗

The 60-second version of Varun Beverages Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Varun Beverages Limited, together with its subsidiaries, manufactures, bottles, sells, and distributes beverages under the PepsiCo brands in India, Sri Lanka, Nepal, Zambia, Morocco, Zimbabwe, the Democratic Republic of Congo, Mozambique, South Africa, Lesotho, Eswatini, Namibia, and Botswana.

IndustryBeverages - Non-Alcoholic

SectorConsumer Defensive

Employees10,654

Annual revenue₹20,835 Cr

How does it make money?

Turns over ₹20,835 Cr a year. Of every ₹100 of sales, about ₹15 reaches shareholders as profit, with ₹25 left at the operating level before interest, tax and depreciation. Each of its 10,654 employees supports ₹1.96 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin25.5%

Net margin14.6%

Revenue / employee₹1.96 Cr

Who are its competitors?

The closest listed comparisons in its industry are TATA CONSUMER PRODUCT LTD, NESTLE INDIA LIMITED, BRITANNIA INDUSTRIES LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

TATA CONSUMER PRODUCT LTDP/E 59.3x · ROE 7.5%

NESTLE INDIA LIMITEDP/E 59.8x · ROE 79.9%

BRITANNIA INDUSTRIES LTDP/E 44.1x · ROE 51.0%

What is its competitive advantage?Some evidence

ROCE of 19.4% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

ROCE19.4%

ROE16.9%

Peer median ROE51.0%

What is the outlook?

27 analysts covering the stock expect revenue to grow about 75.9% and earnings to grow about 15.3% in the year to 2027. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+75.9%

Est. earnings growth+15.3%

Analysts27

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +61% while net margin moved +26% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+61%

Margin effect+26%

DalalBaazaar Score

74/ 100

Good

Weighted across six categories. Every point is explained below.

✗ P/E of 43.0x is demanding — it needs sustained high growth to justify
✓ P/E is 38% below its own historical median of 69.7x — cheap by its own standards
✗ P/B of 6.69x is a steep premium to book

Quality vs. Valuation

Company Quality

78/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

57/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

43.0x

4Y Median

69.7x

44 monthly readings · mean 75.1x · range 44.6x–122.3x

Sector Median

59.3x

median of 3 sector peers

🟢Current valuation is approximately 38% below its 4y median of 69.7x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 27% below the peer median of 59.3x.

vs. its own history

Cheap

69.7x median over 44 months · -38%

vs. sector peers

Cheap

59.3x median of 3 peers · -27%

vs. generic bands

Expensive

Above 35x

P/E (Trailing)

43.0x

P/B

6.69x

EV/EBITDA

27.6x

PEG

1.62

Dividend Yield

0.46%

What's Good / What's Bad

🟢 What's Going Well6

Margins are improving
EBITDA margin is up from 22.7% to 25.5% over 3 years.
Debt is being paid down
Total debt is down 35% over 3 years.
Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.
Valuation below its historical average
At 43.0x the stock trades 38% below its own median of 69.7x.
Very low debt
Debt/Equity of 0.16x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention3

Return on equity is falling
ROE has dropped from 29.3% to 15.5% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 28.9% to 19.4% — often a sign of competition or overexpansion.
Receivables growing faster than sales
Receivables are up 317% against revenue growth of 61% — customers are taking longer to pay.

Red Flags

1 item require attention · 1 high

🔴Receivables growing faster than salesFinancial
Receivables up 317% against revenue up 61% — sales are being booked faster than they are collected.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 19.4% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Margin expansion has further to run
EBITDA margin has risen from 22.7% to 25.5%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Deleveraging frees up earnings
Debt is down 35% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Priced below its own history
The stock trades 38% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Cheaper than its peers
It trades 27% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.

🔴 Bear CaseWhat could go wrong?

Sales are being booked faster than collected
Receivables are up 317% against revenue up 61%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
Returns on shareholder capital are falling
ROE has dropped from 29.3% to 15.5%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 13% a year✓ 17.3% CAGR
Latest reported year was 20.4%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 23%✓ 25.5%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✓ ₹770 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.5x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 16%✓ 19.4%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

11 / 12 checks passed

✓ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✗ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

8 good · 1 neutral · 2 weak

Market Cap

₹1.46 L Cr

Large Cap

Large, widely-covered business — typically the steadiest of the bands

P/E (Trailing)

43.0x

Expensive

Expensive — verify against sector peers

P/B Ratio

6.69x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹10

Profitable

Profitable on a per-share basis

ROE

16.9%

Strong

Strong capital efficiency

ROCE

19.4%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.16x

Low

Conservative leverage

Revenue Growth (YoY)

20.4%

Healthy

Healthy top-line growth

Profit Growth (YoY)

15.7%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.46%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹129 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹430.5

P/E (Forward)

37.0x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

ROA

9.8%

Good

Assets are working hard

Operating Margin

24.1%

Good

Healthy core-business profitability

Net Margin

14.0%

Good

Strong bottom-line conversion

Current Ratio

2.03

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.29

Defensive

Steadier than the market

52W Range Position

28%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

433.3 / 427.2

Bullish alignment (short > long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

47.3

Neutral momentum

Financial Trend (4-Year)

Metric	FY22	FY23	FY24	FY25	3Y CAGR
Revenue	₹12,921 Cr	₹15,622 Cr	₹19,445 Cr	₹20,835 Cr	+17.3%
EBITDA	₹2,936 Cr	₹3,771 Cr	₹4,906 Cr	₹5,311 Cr	+21.8%
EBITDA Margin	22.7%	24.1%	25.2%	25.5%	—
PAT (Net Profit)	₹1,497 Cr	₹2,056 Cr	₹2,595 Cr	₹3,036 Cr	+26.6%
EPS	₹4.61	₹6.33	₹7.94	₹8.98	+24.9%
ROE	29.3%	29.6%	15.6%	15.5%	—
ROCE	28.9%	27.2%	20.8%	19.4%	—
Total Debt	₹3,884 Cr	₹5,431 Cr	₹2,826 Cr	₹2,508 Cr	-13.6%
Free Cash Flow	-₹11 Cr	-₹873 Cr	-₹398 Cr	₹770 Cr	—

🟢 Revenue has grown at 17.3% a year over 3 years.

🟢 EBITDA has grown at 21.8% a year over 3 years.

🟢 EBITDA Margin has risen from 22.7% to 25.5% over 3 years (+2.8 pts).

🟢 PAT (Net Profit) has grown at 26.6% a year over 3 years.

🟢 EPS has grown at 24.9% a year over 3 years.

🔴 ROE has fallen from 29.3% to 15.5% over 3 years (-13.8 pts).

🔴 ROCE has fallen from 28.9% to 19.4% over 3 years (-9.4 pts).

🟢 Total Debt has shrunk at 13.6% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹11 Cr to ₹770 Cr.

Balance Sheet & Cash Flow — FY2025

Total Assets

₹25,565 Cr

Total Liabilities

₹5,824 Cr

Total Debt

₹2,508 Cr

Cash & Equivalents

₹1,784 Cr

Operating Cash Flow

₹3,509 Cr

Capex

-₹2,739 Cr

Shareholding (proxy)

Institutional Holding

24.2%

Insider Holding

60.7%

Corporate Actions

Next Earnings

28 Oct 2026

Dividend Rate

₹2

Ex-Dividend Date

31 Jul 2026

Analyst Consensus

Recommendations

24 Buy · 4 Hold · 0 Sell

Target Price (Mean)

₹549.72

+27.7% vs CMP

Target Range

₹422 – ₹657

Peer Comparison

Company	P/E	ROE
TATA CONSUMER PRODUCT LTD	59.3x	7.5%
NESTLE INDIA LIMITED	59.8x	79.9%
BRITANNIA INDUSTRIES LTD	44.1x	51.0%

Recent News

2 mixed4 general

Varun Beverages - 10 largecap stocks with up to 40% upside potential. Do you own any?

The Economic Times, 30 Aug

Varun Beverages shares fall 3% after foray into alcobev segment; here’s what JP Morgan, CLSA analysts said

Upstox, 25 AugPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

Food Stocks 2026: Varun Beverages, Tata Consumer, Bikaji Foods

Univest, 15 Oct

Varun Beverages share price target 2026: 31% returns ahead? Why Choice Broking recommends 'buy' - Rationale explained

TradingView, 28 AugAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Varun Beverages slips 4%, hits 3-month low on heavy volume

Business Standard, 26 Aug

Five Stocks To Buy Today, October 6: Varun Beverages, Aditya Infotech, Aegis Vopak Terminals, And More

NDTV Profit, 06 Oct

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🟢Business QualityStrong13.1/20

🟢Financial HealthStrong17.6/20

🟢GrowthStrong18.5/20

🟡ProfitabilityModerate9.5/15

🔴ValuationDemanding6.7/15

🟢RiskLow8.5/10

Good business at a fair price

A sound business at a reasonable valuation. Suitable for a long-term holding, with the valuation and the direction of margins worth watching rather than the business itself. 1 high-severity red flag sits above this conclusion and should be read first.

This thesis breaks if

✓Revenue growth stays above 13% a year17.3% CAGR
✓EBITDA margin holds above 23%25.5%
✓Free cash flow remains positive₹770 Cr
✓Debt / EBITDA stays below 2x0.5x
✓ROCE stays above 16%19.4%