BSE:540180

Stock Analysis Report

Executive Summary

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


Snowflake Analysis

Solid track record with high growth potential.


Similar Companies

Share Price & News

How has Varun Beverages's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: 540180's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

1.4%

540180

3.0%

IN Beverage

2.2%

IN Market


1 Year Return

-5.6%

540180

-20.0%

IN Beverage

-27.6%

IN Market

Return vs Industry: 540180 exceeded the Indian Beverage industry which returned -23.7% over the past year.

Return vs Market: 540180 exceeded the Indian Market which returned -32.2% over the past year.


Shareholder returns

540180IndustryMarket
7 Day1.4%3.0%2.2%
30 Day-27.1%-24.4%-20.0%
90 Day-24.2%-19.1%-25.9%
1 Year-5.2%-5.6%-19.9%-20.0%-26.1%-27.6%
3 Year82.8%80.7%38.9%38.3%-15.9%-20.5%
5 Yearn/a-24.6%-24.9%-5.7%-10.6%

Price Volatility Vs. Market

How volatile is Varun Beverages's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Varun Beverages undervalued compared to its fair value and its price relative to the market?

17.9%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: 540180 (₹536.75) is trading below our estimate of fair value (₹705.65)

Significantly Below Fair Value: 540180 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: 540180 is poor value based on its PE Ratio (31.9x) compared to the Beverage industry average (8.9x).

PE vs Market: 540180 is poor value based on its PE Ratio (31.9x) compared to the Indian market (9.4x).


Price to Earnings Growth Ratio

PEG Ratio: 540180 is poor value based on its PEG Ratio (1.3x)


Price to Book Ratio

PB vs Industry: 540180 is overvalued based on its PB Ratio (4.7x) compared to the IN Beverage industry average (0.9x).


Next Steps

Future Growth

How is Varun Beverages forecast to perform in the next 1 to 3 years based on estimates from 9 analysts?

24.2%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 540180's forecast earnings growth (24.3% per year) is above the savings rate (6.5%).

Earnings vs Market: 540180's earnings (24.3% per year) are forecast to grow faster than the Indian market (19.2% per year).

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

Revenue vs Market: 540180's revenue (11.8% per year) is forecast to grow faster than the Indian market (8.8% per year).

High Growth Revenue: 540180's revenue (11.8% 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 (20.3%)


Next Steps

Past Performance

How has Varun Beverages performed over the past 5 years?

41.6%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 540180 has high quality earnings.

Growing Profit Margin: 540180's current net profit margins (6.6%) are higher than last year (5.7%).


Past Earnings Growth Analysis

Earnings Trend: 540180 has become profitable over the past 5 years, growing earnings by 41.6% per year.

Accelerating Growth: 540180's earnings growth over the past year (60.1%) exceeds its 5-year average (41.6% per year).

Earnings vs Industry: 540180 earnings growth over the past year (60.1%) exceeded the Beverage industry -5.9%.


Return on Equity

High ROE: 540180's Return on Equity (14.1%) is considered low.


Next Steps

Financial Health

How is Varun Beverages's financial position?


Financial Position Analysis

Short Term Liabilities: 540180's short term assets (₹16.7B) do not cover its short term liabilities (₹22.2B).

Long Term Liabilities: 540180's short term assets (₹16.7B) do not cover its long term liabilities (₹28.1B).


Debt to Equity History and Analysis

Debt Level: 540180's debt to equity ratio (101.7%) is considered high.

Reducing Debt: 540180's debt to equity ratio has reduced from 701.9% to 101.7% over the past 5 years.

Debt Coverage: 540180's debt is well covered by operating cash flow (38.2%).

Interest Coverage: 540180's interest payments on its debt are well covered by EBIT (3.5x coverage).


Balance Sheet


Next Steps

Dividend

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

0.46%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: 540180's dividend (0.47%) isn’t notable compared to the bottom 25% of dividend payers in the Indian market (0.96%).

High Dividend: 540180's dividend (0.47%) is low compared to the top 25% of dividend payers in the Indian market (4.06%).


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 3 years.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (14.9%), 540180's dividend payments are thoroughly covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: 540180's dividends in 3 years are forecast to be well covered by earnings (16% payout ratio).


Next Steps

Management

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

2.2yrs

Average board tenure


CEO

Kapil Agarwal (55yo)

no data

Tenure

₹57,150,000

Compensation

Mr. Kapil Agarwal serves as the Chief Executive Officer of Varun Beverages Limited and also has been its Whole-time Director since 2012. He joined Varun Beverages Limited since April November 01, 2004. Mr. ...


CEO Compensation Analysis

Compensation vs Market: Kapil's total compensation ($USD749.05K) is about average for companies of similar size in the Indian market ($USD660.05K).

Compensation vs Earnings: Kapil's compensation has increased by more than 20% in the past year.


Board Members

NamePositionTenureCompensationOwnership
Kapil Agarwal
CEO & Whole-Time Directorno data₹57.15m0.14% 222.5m
Varun Ravi Jaipuria
Whole-Time Directorno data₹31.49m17.55% 27.5b
Raj Gandhi
Whole-Time Directorno data₹48.55m0.21% 331.4m
Naresh Trehan
Non-Executive & Independent Director4.33yrsno datano data
Ravi Jaipuria
Chairmanno datano data19.91% 31.2b
Pradeep Sardana
Non-Executive & Independent Director4.08yrs₹800.00k0.00045% 704.3k
Rajinder Jeet Bagga
Whole-Time Director0.92yr₹18.48m0.045% 70.3m
Sita Khosla
Non-Executive Independent Director2.17yrs₹1.90mno data
Rashmi Dhariwal
Non-Executive Independent Director2.08yrs₹3.00mno data
Ravi Gupta
Non-Executive Independent Director2.08yrs₹1.90mno data

2.2yrs

Average Tenure

59yo

Average Age

Experienced Board: 540180's board of directors are not considered experienced ( 2.2 years average tenure), which suggests a new board.


Ownership

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


Insider Trading Volume

Insider Buying: 540180 insiders have sold more shares than they have bought in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

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


Top Shareholders

Company Information

Varun Beverages Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Varun Beverages Limited
  • Ticker: 540180
  • Exchange: BSE
  • Founded: 1995
  • Industry: Soft Drinks
  • Sector: Food, Beverage & Tobacco
  • Market Cap: ₹156.513b
  • Shares outstanding: 288.69m
  • Website: https://www.varunpepsi.com

Number of Employees


Location

  • Varun Beverages Limited
  • RJ Corp House
  • Plot No. 31
  • Gurugram
  • Haryana
  • 122002
  • India

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
VBLNSEI (National Stock Exchange of India)YesEquity SharesININRNov 2016
540180BSE (Mumbai Stock Exchange)YesEquity SharesININRNov 2016

Biography

Varun Beverages Limited operates as the franchisee of carbonated soft drinks (CSDs) and non-carbonated beverages (NCBs) sold under trademarks owned by PepsiCo. The company produces, bottles, and distributes 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, and Sting brands. It also produces and distributes NCBs under the brands of Tropicana Slice, Tropicana Frutz, Seven-Up Nimbooz, Gatorade, and Quaker Oat Milk, as well as packaged drinking water under the brand Aquafina. In addition, the company holds the franchise for Ole brand of PepsiCo products in Sri Lanka. It sells its products to retail outlets directly and through distributors in India, as well as territories of Nepal, Sri Lanka, Morocco, Zambia, and Zimbabwe. The company was incorporated in 1995 and is based in Gurugram, India. Varun Beverages Limited is a subsidiary of RJ Corp Limited. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/04/08 14:23
End of Day Share Price2020/04/08 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.