PepsiCo's Bottlemaker Is A Stock To 'Buy'? JM Financials Shares Outlook

JM Financial is bullish on Varun Beverages, the company that handles the bottling of PepsiCo. In its special report on the company, the brokerage house has initiated an 'Buy' rating on Varun beverages stocks.

In the report, JM Financial listed, among others, fund-raise through QIP, debt repayment and interest cost savings from these payments as some of the positives for Varun beverages.

The report also listed several other key technical and fundamental highlights for the company ahead of 2025.

Varun Beverages Limited: Portfolio and Distribution 

According to the JM Financials report, Varun Beverages Limited (VBL) has significantly increased its share in PepsiCo's India volume sales, growing from less than 30 per cent in 2011 to about 90 per cent in 2024.

Varun Beverages: Key Growth Drivers 

According to the brokerage, some of the other positives for the company include leveraging PepsiCo's innovations to expand in non-carbonated beverages such as Tropicana and Sting energy drinks.

The company also plans to add 300,000-400,000 retail outlets and 100,000 visi-coolers annually to increase reach (currently at 4 million outlets, targeting 10 million).

Strengthening manufacturing to ensure efficient market servicing. Healthy margins are expected to continue due to backward integration, reduced sugar usage, and expanded market presence. 
Consolidated sales are projected to grow at a CAGR of 18.7 per cent  between 2024-2026, with a volume growth CAGR of 16.6 per cent.

Earnings are expected to grow at a CAGR of 29 per cent, driven by interest cost savings and strong execution.

Varun Beverages Share Price Target 2025

The brokerage said that VBL’s robust execution and growth potential make it an attractive investment. The brokerage has initiated a BUY rating on Varun Beverages with the target price of Rs 725.