Varun Beverages (VARB.NS): 2Q Below: India Growth Debate Persists; Mgmt. Remains Constructive

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Varun Beverages (VARB.NS): 2Q Below: India Growth Debate Persists; Mgmt. Remains Constructive

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28 Jul 2026 15:27:05 ET │ 22 pages

Varun Beverages (VARB.NS)

2Q Below: India Growth Debate Persists; Mgmt. Remains Constructive

CITI'S TAKE

Varun Beverages’ 2QCY26 performance missed expectations – India

volumes grew 14% (off a -7% base) primarily impacted by weather-led

disruption in April. Key investor debate at VBL remains whether the growth Buy

trajectory has structurally moderated amid increased competitive intensity Price (28 Jul 26 15:30) Rs430.00

in India; we note that despite competitive pressures, India volumes

delivered an 8% CAGR over the past two years in 1HCY26. Going ahead, Target price Rs580.00↓

while mgmt. commentary remains constructive, calling out sustained from Rs640.00

20%+ volume growth trends extending into July, we note that 2H accounts Expected share pricefor only 35% of annual volumes. We believe the category remains attractive 34.9%

(penetration-led growth opportunity) over the long-term and competitive return

intensity could be gradually easing with Campa reducing volumes in its Rs10 Expected dividend yield 0.4%

SKU – we would look for an acceleration in 2-year CAGR trajectory. Expected total return 35.3%

Importantly, the revised PepsiCo agreement (extended to 2049, removal of

SPV restrictions) enhances strategic flexibility and creates optionality Market Cap Rs1,454,460M

beyond the core PepsiCo franchise. Maintain Buy. US$15,164M

2QCY26 results — Consolidated revenue at Rs84.5bn grew 20% YoY, vs. Citi/cons.

est. Rs87.6bn/Rs82.3bn (+25%/+17%). EBITDA at Rs23.4bn grew 17% YoY vs.

Citi/cons. est. Rs25.4bn/Rs24.3bn (+27%/+22%); EBITDA margin at 27.7% (-80bps Price Performance

YoY). Recurring PAT at Rs15.2bn (+15%) – vs. Citi / cons. est.