Pepsi – Dealer’s name: Varun Drinks (Purchase)
Target: ₹1,005
CMP: ₹903.90
Varun Drinks Ltd (VBL) is the second largest franchisee for PepsiCo on this planet (outdoors US). It manufactures carbonated smooth drinks – Pepsi, Mountain Dew, Seven Up, Mirinda; Non carbonated drinks – Tropicana Slice, Tropicana Frutz; and Bottled water – Aquafina.
It operates in India and can be the unique bottler for PepsiCo in Nepal, Sri Lanka, Morocco, Zambia and Zimbabwe.
Enterprise has recovered to flat ranges y-o-y. VBL expects development to pick-up on scale up of dairy portfolio coupled with new launches and sustainable development inside current merchandise. In-home consumption which noticed a spurt in H1-FY21 has now settled all the way down to final 12 months ranges.
Total administration expects to clock festive gross sales (Oct-Dec) much like earlier 12 months ranges. When it comes to dairy portfolio, administration expects to roll it out throughout places with wider presence throughout faculties to capitalise on the well being pattern.
We count on VBL to register Revenues/Earnings CAGR of 11 per cent/31 % resp. over CY19-22E. This development can be pushed by consolidation in newly acquired territories; distribution led market share positive factors; and margin tailwinds from price efficiencies.
Given the wholesome outlook for the upcoming season and tie-ups with main and quick rising QSR gamers in India may propel VBLs development into a brand new orbit.
