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Varun Beverages
Our verdict on Varun Beverages isn’t the consensus take — see where we landed, and the one risk the bull case glosses over.
See the verdict — free →Does management do what it says?
Consolidated EBITDA margins for 9M CY2025 stood at 25.2%, significantly above the 21% long-term target. (2 exceeded across 2 tracked commitments)
“Further, we have always guided of consolidated margins at 21% and above, but we are still doing much better than that. And we believe going forward also, when the season starts, the margins should be better with stronger growth coming this year.”
The company confirmed the commencement of commercial production for PepsiCo snacks (Cheetos) at its Zimbabwe facility during the year. (2 met across 2 tracked commitments)
“The acquisition is expected to be completed on or before 30 June 2026.”
See the full cited Management analysis of Varun Beverages
How durable is the business?
International markets are expanding rapidly, offsetting domestic weakness with 15.1% volume growth, led by South Africa. (5 expanding)
“volume growth of... 21.4% in international territories.”
The company commissioned four new Greenfield plants in India, significantly increasing production capacity and supply chain agility. (5 expanding)
“if we had a 200 bottles per minute line, now we have got a 1,000 bottles per minute line and the manpower is the same. It is five times more production but using the same manpower.”
See the full cited Business Model analysis of Varun Beverages
Where does growth come from?
The company is aggressively building capacity with four new greenfield plants commissioned in India and significant international expansion in DRC, Morocco, and South Africa. (1 accelerating, 1 new trend, 3 steady across 5 signals, 1 leading indicator)
“Depreciation increased by 30.9% on account of commissioning of new plants of last year (Buxar, Prayagraj, Damtal and Meghalaya) which were not present in the base quarter.”
Management expects the Indian beverage market to continue growing at double-digit rates for the next decade, fueled by competition and increased infrastructure like cooling equipment. — Indian Beverage Market Growth: Double-digits
“We are very bullish on the Indian market, and we believe the growth should continue in double-digits for the next 5-10 years at least.”
See the full cited Future Growth analysis of Varun Beverages
What could break the thesis?
The risk materialized significantly this quarter with unseasonal rains causing a 7.1% volume decline in India, leading to a 3% drop in consolidated sales volumes. (2 intensifying, 3 easing, 1 high-severity)
“Last year was the one exceptional year. That is what we are trying to say. Otherwise, on an average we have been always growing in double digits... It is only last year, India because of the weather, our growth was lower.”
The relationship remains stable with a long-term agreement valid until 2039 and expansion into PepsiCo's snack category in Morocco. (3 stable, 1 easing, 1 high-severity)
“34+ Years of Association (agreement in India valid till April, 2039) 90%+ of PepsiCo India Sales Volume”
See the full cited Risk analysis of Varun Beverages
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