Varun Beverages (BSE:540180) - Share price, News & Analysis

Q: What is the Fair Price of 540180 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

540180 (₹794.3) is trading above our estimate of [[fair value]] (₹370.65)

540180 fundamental analysis
Snowflake Score
Valuation	1/6
Future Growth	5/6
Past Performance	6/6
Financial Health	4/6
Dividends	2/6

540180 Stock Overview

Varun Beverages Limited, together with its subsidiaries, operates as the franchisee of carbonated soft drinks (CSDs) and non-carbonated beverages (NCBs) sold under trademarks owned by PepsiCo.

Rewards

Earnings are forecast to grow 22.24% per year

Earnings grew by 103.1% over the past year

Risk Analysis

Has a high level of debt

Varun Beverages Competitors

United Spirits

NSEI:MCDOWELL-N

₹559.1b

United Breweries

BSE:532478

₹394.6b

Galactico Services

BSE:542802

₹6.4b

Marico

BSE:531642

₹634.6b

Price History & Performance

Summary of all time highs, changes and price drops for Varun Beverages
Historical stock prices
Current Share Price	₹794.30
52 Week High	₹808.65
52 Week Low	₹473.33
Beta	0.64
1 Month Change	8.35%
3 Month Change	25.07%
1 Year Change	65.61%
3 Year Change	182.66%
5 Year Change	405.71%
Change since IPO	480.38%

Shareholder Returns

	540180	IN Beverage	IN Market
7D	3.2%	2.8%	0.6%
1Y	65.6%	25.5%	-0.3%

Return vs Industry: 540180 exceeded the Indian Beverage industry which returned 25.5% over the past year.

Return vs Market: 540180 exceeded the Indian Market which returned -0.3% over the past year.

Price Volatility

Is 540180's price volatile compared to industry and market?
540180 volatility
540180 Average Weekly Movement	5.0%
Beverage Industry Average Movement	5.6%
Market Average Movement	6.8%
10% most volatile stocks in IN Market	9.8%
10% least volatile stocks in IN Market	4.4%

Stable Share Price: 540180 is less volatile than 75% of Indian stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: 540180's weekly volatility (5%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1995	10,700	n/a	https://www.varunpepsi.com

Varun Beverages Limited, together with its subsidiaries, operates as the franchisee of carbonated soft drinks (CSDs) and non-carbonated beverages (NCBs) sold under trademarks owned by PepsiCo. The company manufactures, bottles, distributes, and sells a range of CSDs under the Pepsi, Diet Pepsi, Seven-Up, Mirinda Orange, Mirinda Lemon, Mountain Dew, Seven-Up Nimbooz Masala Soda, Evervess Soda, Duke’s Soda, Sting, Pepsi Black, Mountain Dew Ice, Slice Fizzy, and Teem brands. It also produces and distributes NCBs under the of Tropicana Slice, Tropicana Juices, Seven-Up Nimbooz, Gatorade, and Quaker Oats Milk brand names, as well as packaged drinking water under the Aquafina and Aquavess brand names.

Varun Beverages Fundamentals Summary

How do Varun Beverages's earnings and revenue compare to its market cap?
540180 fundamental statistics
Market Cap	₹515.94b
Earnings (TTM)	₹8.19b
Revenue (TTM)	₹94.10b

63.0x

P/E Ratio

5.5x

P/S Ratio

Is 540180 overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
540180 income statement (TTM)
Revenue	₹94.10b
Cost of Revenue	₹44.15b
Gross Profit	₹49.95b
Other Expenses	₹41.76b
Earnings	₹8.19b

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	12.61
Gross Margin	53.08%
Net Profit Margin	8.70%
Debt/Equity Ratio	80.7%

How did 540180 perform over the long term?

See historical performance and comparison

Dividends

0.2%

Current Dividend Yield

13%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is 540180 undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

1/6

Valuation Score 1/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for 540180?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for 540180. This is calculated by dividing 540180's market cap by their current preferred multiple.
What is 540180's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	₹515.94b

540180 key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	5.8x
Enterprise Value/EBITDA	30.3x
PEG Ratio	2.8x

Price to Earnings Ratio vs Peers

How does 540180's PE Ratio compare to its peers?

540180 PE Ratio vs Peers

The above table shows the PE ratio for 540180 vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	92.2x
MCDOWELL-N United Spirits	67.5x	18.1%	₹559.1b
532478 United Breweries	108x	25.4%	₹394.6b
542802 Galactico Services	141.4x	n/a	₹6.4b
531642 Marico	51.8x	13.9%	₹634.6b
540180 Varun Beverages	63x	22.2%	₹515.9b

Forward PE

Price-To-Earnings vs Peers: 540180 is good value based on its Price-To-Earnings Ratio (63x) compared to the peer average (92.2x).

Price to Earnings Ratio vs Industry

How does 540180's PE Ratio compare vs other companies in the Asian Beverage Industry?

Price-To-Earnings vs Industry: 540180 is expensive based on its Price-To-Earnings Ratio (63x) compared to the Indian Beverage industry average (19.5x)

Price to Earnings Ratio vs Fair Ratio

What is 540180's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

540180 PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	63x
Fair PE Ratio	32.7x

Price-To-Earnings vs Fair Ratio: 540180 is expensive based on its Price-To-Earnings Ratio (63x) compared to the estimated Fair Price-To-Earnings Ratio (32.7x).

Share Price vs Fair Value

What is the Fair Price of 540180 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: 540180 (₹794.3) is trading above our estimate of fair value (₹370.65)

Significantly Below Fair Value: 540180 is trading above our estimate of fair value.

Price to Earnings Growth Ratio

PEG Ratio: 540180 is poor value based on its PEG Ratio (2.8x)

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Future Growth

How is Varun Beverages forecast to perform in the next 1 to 3 years based on estimates from 13 analysts?

Future Growth Score

5/6

Future Growth Score 5/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

22.2%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: 540180's forecast earnings growth (22.2% per year) is above the savings rate (6.8%).

Earnings vs Market: 540180's earnings (22.2% per year) are forecast to grow faster than the Indian market (17.3% per year).

High Growth Earnings: 540180's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: 540180's revenue (12.3% per year) is forecast to grow faster than the Indian market (11.5% per year).

High Growth Revenue: 540180's revenue (12.3% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: 540180's Return on Equity is forecast to be high in 3 years time (24.5%)

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Past Performance

How has Varun Beverages performed over the past 5 years?

Past Performance Score

6/6

Past Performance Score 6/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

23.0%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: 540180 has high quality earnings.

Growing Profit Margin: 540180's current net profit margins (8.7%) are higher than last year (5.7%).

Past Earnings Growth Analysis

Earnings Trend: 540180's earnings have grown significantly by 23% per year over the past 5 years.

Accelerating Growth: 540180's earnings growth over the past year (103.1%) exceeds its 5-year average (23% per year).

Earnings vs Industry: 540180 earnings growth over the past year (103.1%) exceeded the Beverage industry 29.6%.

Return on Equity

High ROE: 540180's Return on Equity (21%) is considered high.

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Financial Health

How is Varun Beverages's financial position?

Financial Health Score

4/6

Financial Health Score 4/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: 540180's short term assets (₹25.5B) do not cover its short term liabilities (₹30.2B).

Long Term Liabilities: 540180's short term assets (₹25.5B) exceed its long term liabilities (₹23.6B).

Debt to Equity History and Analysis

Debt Level: 540180's net debt to equity ratio (77.1%) is considered high.

Reducing Debt: 540180's debt to equity ratio has reduced from 85.5% to 80.7% over the past 5 years.

Debt Coverage: 540180's debt is well covered by operating cash flow (36.4%).

Interest Coverage: 540180's interest payments on its debt are well covered by EBIT (8.3x coverage).

Balance Sheet

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Dividend

What is Varun Beverages's current dividend yield, its reliability and sustainability?

Dividend Score

2/6

Dividend Score 2/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

0.21%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: 540180's dividend (0.21%) isn’t notable compared to the bottom 25% of dividend payers in the Indian market (0.42%).

High Dividend: 540180's dividend (0.21%) is low compared to the top 25% of dividend payers in the Indian market (1.86%).

Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, 540180 has been paying a dividend for less than 10 years.

Growing Dividend: 540180's dividend payments have increased, but the company has only paid a dividend for 5 years.

Earnings Payout to Shareholders

Earnings Coverage: With its low payout ratio (13.2%), 540180's dividend payments are thoroughly covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its reasonably low cash payout ratio (27.3%), 540180's dividend payments are well covered by cash flows.

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Management

How experienced are the management team and are they aligned to shareholders interests?

0.9yrs

Average management tenure

CEO

Varun Beverages has no CEO, or we have no data on them.

Leadership Team

Experienced Management: 540180's management team is not considered experienced ( 0.9 years average tenure), which suggests a new team.

Board Members

Experienced Board: 540180's board of directors are considered experienced (6.5 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/07/03 00:00
End of Day Share Price	2022/07/01 00:00
Earnings	2022/03/31
Annual Earnings	2021/12/31