Varun Beverages: First Take: 2QCY26 weak operational print led by India volume miss

Research evidence excerpt

Varun Beverages: First Take: 2QCY26 weak operational print led by India volume miss

Latika Chopra, CFA AC Asia Pacific Equity Research

(91-22) 6157-3584 28 July 2026 J P M O R G A N

latika.chopra@jpmorgan.com

Investment Thesis, Valuation and Risks

Varun Beverages (Overweight; Price Target: Rs565.00)

Investment Thesis

Varun Beverages is PepsiCo’s second-largest bottler outside the U.S., accounting for 90%+

of PepsiCo’s India business. VBL has meaningfully expanded its overseas footprint over the

years to add more of PepsiCo’s bottling operations (key markets: Zimbabwe, Morocco,

Congo and more), with the most recent addition being South Africa in 2024. We believe

there are multiple drivers in place for VBL to drive double-digit revenue in India: attractive

growth potential for the packaged beverages category, scope for portfolio expansion

(localized offerings, more launches from PepsiCo’s global portfolio), distribution

enhancement (growing outlet coverage by 10%+ p.a.), and a strong back-end with scaled-up

manufacturing facilities. Overseas, the scale-up of South Africa operations should aid

overall revenue growth. We expect raw material cover to support margins despite near-term

geopolitical tensions and input cost pressures. We rate the stock OW.

Valuation

Our SOTP-based Jun-27 PT is Rs565. We value the India business at an EV/EBITDA

multiple of 30x, in line with the sector average for packaged foods, and the overseas business

at an EV/EBITDA multiple of 17x to incorporate heightened macro volatility, competitive

intensity, and near-term margin risk.

Risks to Rating and Price Target

Downside risks include: (1) a slowdown in the India demand environment or higher

competitive intensity; (2) a slower-than-expected scale-up in new overseas geographies