MOFSL Gives ‘Buy’ Rating On Varun Beverages – All You Need to Know

Motilal Oswal Financial Services (MOFSL) has given a ‘buy’ rating on Varun Beverages Ltd (VBL). The brokerage believes that the PepsiCo bottler is set to maintain its earnings momentum. The growth can be attributed to expansion in international markets, stability in the domestic market, distribution expansion and increased refrigeration penetration in rural and semi-rural areas.

During the March quarter, Varun Beverages posted a revenue of 29% on a YoY basis, buoyed by a 30% YoY surge in volume. This came on the back of 15.5% growth in organic volume and the consolidation of South Africa and DRC operations in the current quarter.

MOFSL observed, “VBL maintained its volume growth trajectory in the domestic market and continued expanding internationally, with the integration in South Africa progressing well. Management is confident about its double-digit growth guidance, supported by industry tailwinds and ongoing expansion into new markets through the addition of visi-coolers in both domestic and international markets.”

Among other factors, MOFSL highlighted VBL’s Q1 results. The brokerage said that the company is set to see double-digit returns in the long-term and maintained a 21% margin in the Indian market. The management is of the opinion that the Indian beverage market remains largely untapped and continues to expand.

To stay competitive amid heightened competition, VBL is ramping up the deployment of visi-coolers.

In a nutshell, MOFSL expects the bottler to post a compounded annual growth of 18% in revenue, 16% in Ebitda, and 26% in PAT over 2025–26.