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The market expects much less from Varun Beverages than it has delivered before.
At today’s share price, buyers are assuming Varun Beverages grows about 13% a year, forever. Over the last ten years it actually grew about 23% a year. That is a big step down from its own record. Either the market can see a problem that the published accounts do not show yet, or it is expecting a slowdown that has not happened.
- How it is valued: Discounted cash flow.
- What the price assumes: 13% growth, against 23% the model takes from its own record.
- Ten-year record: Between FY2018 and FY2025, Varun Beverages' revenue went from ₹5,228 crore to ₹22,226 crore — it compounded at about 23% a year over 7 years.
- Biggest swing factor: Volume growth. Main risk: Weather.
01Bottling PepsiCo's drinks
Varun Beverages, controlled by Ravi Jaipuria's RJ Corp, is one of PepsiCo's largest bottlers in the world outside the US. It manufactures, bottles and distributes PepsiCo drinks — Pepsi, 7Up, Mountain Dew, Sting, Tropicana and Aquafina — in India and several African and South Asian countries.
It has expanded in Africa, including South Africa, and reports on a calendar-year basis. Summer is its biggest season.
02What the market is assuming
Work backwards from today's share price and you can see what buyers are quietly taking for granted. Here is the growth that price implies for Varun Beverages, next to what the model assumes from the company's own record.
The further apart these two numbers are, the bigger the bet a buyer at today's price is making.
03Varun Beverages' record, in plain numbers
Between FY2018 and FY2025, Varun Beverages' revenue went from ₹5,228 crore to ₹22,226 crore — it compounded at about 23% a year over 7 years. Net profit grew from ₹300 crore to ₹3,062 crore, about 39% a year — faster than revenue, so margins widened. In FY2025 it kept 13.8% of revenue as net profit — its best year in the period. The latest year added 8.5% to revenue, well behind its own long-run pace.
Revenue and earnings per share in ₹, return on equity and leverage as ratios — all from the filed statements.
Revenue and net profit by year (₹ crore)
| Year | Revenue | Net profit | Margin |
|---|---|---|---|
| FY2018 | 5,228 | 300 | 5.7% |
| FY2019 | 7,248 | 472 | 6.5% |
| FY2020 | 6,556 | 357 | 5.4% |
| FY2021 | 8,958 | 746 | 8.3% |
| FY2022 | 13,391 | 1,550 | 11.6% |
| FY2023 | 16,321 | 2,102 | 12.9% |
| FY2024 | 20,481 | 2,634 | 12.9% |
| FY2025 | 22,226 | 3,062 | 13.8% |
04How Varun Beverages gets valued — and why
Discounted cash flowThis business is valued on the cash it is expected to generate, discounted back at its cost of capital — with growth taken from its own ten-year record rather than from guidance.
05What decides Varun Beverages' value
Volume growth
New territories and plants drive sales.
Summer weather
Hot summers boost demand.
Energy drinks
Sting has been a major growth driver.
Africa
New markets add growth.
06What could go wrong
- Weather. Cool or wet summers hurt sales.
- Sugar and health rules. Taxes on sugary drinks can cut demand.
- PepsiCo dependence. Its business relies on PepsiCo agreements.
07What the full Varun Beverages valuation shows
Sign in free to see the complete Varun Beverages valuation
- ✓Fair value per share — from a ten-year discounted cash flow, every step shown
- ✓The Workbench — change revenue growth, the discount rate or terminal growth and watch VBL's value move
- ✓Bull, base and bear cases — and exactly which assumptions move between them
- ✓Peer comparison — against other beverage and consumer companies
- ✓Downloadable report — the full write-up, yours to keep
08Questions people ask about Varun Beverages
What does Varun Beverages do?
It makes, bottles and sells PepsiCo drinks in India and other countries.
Why is summer important for VBL?
Soft-drink demand peaks in hot weather.
Does Varun Beverages own Pepsi?
No. PepsiCo owns the brands; Varun Beverages is a franchise bottler.
Is Varun Beverages overvalued?
At ₹433 the market is pricing in roughly 13% sustained growth, against the ~23% its own record supports. That is less than it has delivered — on these numbers the market is asking the business for less than its own record, which usually means it doubts the record repeats.
What is the intrinsic value of Varun Beverages?
It is computed from the filed financial statements using the method that fits this business (discounted cash flow), with every assumption shown alongside the result. The per-share figure and the full working are in the report.
How much debt does Varun Beverages carry?
Debt to equity stands at 0.05, down from 0.39 at the start of the period — the balance sheet is a core input to the cost of capital used here.