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Varun Beverages: Can it become a multi-bagger? | Varun Beverages In-depth analysis

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About Varun Beverages

Varun Beverages company was established in the year 1995 by Ravi Jaipuria. The company’s main business is to produce and distribute non-alcoholic beverages across India and some different countries. It is popularly known for manufacturing Pepsico products through Pepsico’s franchise in India. The company is largely dependent on Pepsico’s brand value and its products.

The company has 28 manufacturing units across different places in India comprising Nepal, Sri Lanka, Zambia, Morocco, and Zimbabwe. The company also produces some dairy products.

Varun Beverages products

Some of its products are 



Mountain Dew





Dairy products 

Mango shake 

Cold coffee

Belgian chocolate shake 

Varun Beverages Revenue model 

VBL works under the brand Pepsico by labeling its brand in its production. Varun beverages produce various beverage products like cool drinks, energy drinks, and packed drinking water. As a franchise model, Varun Beverages pays commissions to Pepsico for using its brand. The company also pays royalties to Pepsico on the volume sold.

Varun Beverages revenue

Varun beverages revenue chart | Thewallstreeteye

We can clearly observe that the revenue of the company is surging in every corresponding year except 2020 ( Covid effect) due to the pandemic. Revenue is strong in its segment where is PAT(profit after tax) is very much lower.

Varun Beverages swot analysis

Strengths  – 

Strong distribution networks 

VBL has a strong distribution network of approximately 20,000 distributors and a wide network of retail stores.

Extensive product range 

Varun Beverages has numerous products in their business. The maximization of products varieties increases the volume and the geographic advantages

Sturdy brand franchise 

VBL is tied up with the strongest international brand i.e Pepsico. It also has partnerships with Tropicana and Gatorade.

Vast manufacturing units 

The company has 26 manufacturing units across different locations in India as well as in different parts of the world.



Predominantly VBL gets revenue through Pepscico’s products through their franchise. If tomorrow Pepsico discontinues the partnership with the VBL, it will show a huge impact on their business operations.

Commodity fluctuations 

Generally, commodity prices fluctuate excessively when there are uncertainties or any shortage. If any big unseen event happens, then it could decrease the profit of the company.

Little geographic presence 

VBL has a wide area of presence in India, but it does not have that big presence outside of India.


Can scale to the international market

Currently, VBL has less presence outside of India, but it has the potential to reach outside of India due to the demand and the brand value.

Introduce new products 

With the rise in demand for healthier products, VBL can also introduce sugar-free beverages to capture the market.


Highly competitive 

A huge number of brands are entering the FMCG market, which is affecting the presence of VBL.

Regulations constrictive 

In the FMCG sector, food safety and packaging account for high cost and sometimes leads to huge penalties.

Raw materials 

Economic uncertainties such as wars, inflation, and recession can affect the company while procuring raw materials.

Varun beverages Fundamentals 

Varun Beverages company has a current market capitalization of 88k cores and an enterprise value of 91k cores approximately. The company fits in the large-cap sector that is having more than $10 billion valuation.  Varun Beverages was present in the NiftyFMCG index, NiftyMicdap, Nifty500, and some other indices.

Stock P/E – The current P/E of varun beverages is 58.22 where as the industry P/E is 38.32. No doubt the P/E is slightly higher in its segment because paying 58 times the actual earnings is expensive

Stock P/B – The current book value of the stock is 17.09. As the book value is 78.55 per share, the share is too much costlier.

Varun beverages business

VBL sits in the top 3 positions after Nestle and Britannia in the FMCG sector. As per Statista, the beverage market size for nonalcohol is 1.3 billion dollars. Cool drinks and energy drinks are in high demand in summer, especially during the hot months. In addition, Varun beverages’ revenue is also increasing due to the increased demand for dairy products in the market. FMCG(Fast moving consumer goods) generally have less gross marking and more volume. So, whichever company sells more will earn more. As VBL is having a clear edge over the beverages sector, it could be a highly positive point to consider and analyze for future prospects.


The above information is only for educational purposes. We strictly do not recommend any stocks to buy or sell.

Long-term perspective


Varun is a stock market enthusiast and passionate writer. He has 2+ years of experience in writing about stock market and personal finance.