I am talking about the one particular company which is into consumer staples category & this is the franchise bottler of most renowned brand in the world, i.e. PepsiCo.

Company is Varun Beverage Ltd (VBL), this company has turned 1 lakh into 36 lakhs & that too within a span of 5 years. VBL has turned out to be a emerging multibagger in India. VBL has generated 104% CAGR throughout the period of 5 years (CAGR including the share split)

VBl has generated a returns of 2138% since it’s IPO inception in 2016. This is the perfect example of compounding that company has generated the returns.

Varun Beverage multi-fold returns 

Journey from 1 lakh into 36 lakhs in 5 years

If you would have invested 1 lakh in VBL in 2019 at the share price of 140 rupees

VBL has split their share 4 times in 5 year which is really phenomenal

No of share bought in 2019 for 1 lakh = 714

After holding for the 5 years, no of shares would have been 2411

current VBL share price = ₹ 1510 (26 Feb 2024)

Total Value of shares = No of shares * Current share price

                                       = 2411* 1510

                                       = 36,40,610

This is how the value of 1 lakh invested in 2019 would have become 36.40 lakhs in Feb 2024

About the company

It has been associated with PepsiCo since the 1990s and is a key player in beverage industry and one of the largest franchisee of PepsiCo in the world. The company produces and distributes a wide range of carbonated soft drinks, non-carbonated drinks and packaged water sold under trademarks owned by PepsiCo.

Company Snapshot

• Key player in the beverage industry
• Operations spanning across 6 countries 3 in the Indian Subcontinent ( Sri Lanka, Nepal) contribute 85 to revenues 3 in Africa ( Zambia, Zimbabwe) contribute 15 for fiscal year 2022
• Over 31 years strategic association with PepsiCo accounting for 90 of PepsiCo’s beverage sales volume in 27 States and 7 UTs in India territory
• PepsiCo has tie up with the Varun Beverage Ltd till 2039.
• Company has delivered good profit growth of 46.4% CAGR over last 5 years
• Company has a good return on equity (ROE) track record: 3 Years ROE 29.8%
• Company’s median sales growth is 21.8% of last 10 years

Products offered

PepsiCo brands produced and sold by the company include Pepsi, Seven-up, Mirinda Orange, Mountain Dew, Tropicana Juices and many more.

Revenue Mix

Product wise Breakup

Location Wise Breakup

Brand Wise Break up

Image Source- Tijori Finance

Fundamental Analysis

Shareholding Pattern

If we look at the shareholding pattern then we can see that Promoters & DII’s offloaded their shares & whereas DII’s have raise their stake by 6.3% in the company within a span of 2 years which is a really good sign.

Financial Trend

Above is the financial trend for 5 years, Revenue has increased by 125% whereas Net Profit has increased by 340%, as the fundamentals of the company are really strong & company has well established supply chain network all over the India which will make them eventually to cater to more customers.

Share price Target

• Considering one thing in mind about the VBL, so PepsiCo hass given franchise rights to VBL till 2039 (15 years) 
• PepsiCo will continue to give Franchise rights to VBL as they have setup manufacturing facilities across 6 countries & generally companies do not wish to change in their franchise rights to any other company unless there are any corporate legal actions against the company
• Varun Beverages is a part of the RJ group, which is the largest franchisee for Pizza Hut, KFC, Cream Bell, and Costa Coffee in India
• RJ group has invested alot in all of the companies. So I do not think so there will be any major hurdles from breaking tie up with the PepsiCo.

So considering the CAGR for the past few years

as per the past 5 years record VBL has given 4 times share split, considering this fact VBL will continue to split the shares every alternate  years most probably. Obviously VBL has became a large cap, so the returns will be comparatively lower as compared to the past year returns.

Considering the Good & better scenario for the returns (This is assumption)

• Good Scenario= 25% CAGR for next 15 years (Till 2039)

• Better Scenario= 30% CAGR for next 15 years (Till 2039)

Even if it is good or better returns but for sure VBL is going to make you wealthy if you have patience to hold such precious company.

What Investors should do ?

If you are a wise Investor then you will not be looking for the share to go down & then invest. Please make your decision wisely as you are going to drink Pepsi, Seven-up, Mirinda Orange, Mountain Dew, Tropicana Juices as the product is really good & history has proven it.

Invest only in what you know (Invest only in those companies for which you have used the product)

Disclaimer-

This article is a complete guide about Varun Beverage Ltd
These information and forecasts are based on our analysis, research, company fundamentals and history, experiences, and various technical analyses.
Also, We have talked in detail about the share’s future prospects and growth potential.
Hopefully, this information will help you in your further investment.
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