Varun Beverages saw a subdued 2025 as unusually heavy rainfall led to weak beverage consumption, resulting in modest volume growth of 8% in the consolidated business and 2% in India, with realisations remaining largely flat, Motilal Oswal Financial Services said. However, it added that structural drivers such as retail expansion, improved electrification, portfolio diversification, expansion into adjacent consumer products and stronger cold-chain infrastructure will support the Pepsi bottler’s long-term growth story.
Varun Beverages is transitioning from a pure-play beverage bottler to a broader consumer distribution platform, leveraging its network to scale across multiple product categories, the domestic brokerage said, adding that the company’s partnership with Carlsberg signals a potential entry into the beer market in select African markets. “Additionally, by manufacturing visi-coolers, Varun Beverages is vertically integrating its cold-chain capabilities to support long-term growth,” Motilal Oswal further said.
Meanwhile, the expected above-normal temperatures during the upcoming summer season, along with rising El Niño probabilities, will support beverage consumption, benefiting Varun Beverages, which is already expanding its portfolio through new launches and health-focused offerings and adding significant manufacturing capacity with the commissioning of four new plants, according to the domestic brokerage.
Expansion of the international footprint in 2025 through acquisitions, partnerships and capacity additions, with international business now growing faster than that of India, and volume contribution rising to 31% in 2025, will also support growth, Motilal said. “Additionally, the company is focused on reducing its carbon footprint and is committed to achieving net-zero greenhouse gas emissions across its value chain by CY50. It also aims to increase the use of renewable energy to 30% by CY30, compared to 21% in CY25,” it added.
“We build in 13%/13%/16% revenue/EBITDA/PAT CAGR over CY25-27 and reiterate our BUY rating for the stock. We value the stock at 45x CY27E EPS to arrive at a target price of Rs 550,” Motilal further said. The target price implies an upside potential of more than 35% from the stock’s previous closing price of Rs 406.35 apiece.
Varun Beverages’ share price rose more than 2% to close at Rs 415.50 apiece on Wednesday. While the stock has dropped nearly 16% in 2026 so far and 22% in the past one year, it has gained around 58% in the past three years and 379% in the past five years.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times.)