Varun Beverages Ltd Q3 CY25 – Revenue ₹4,897 Cr, PAT ₹745 Cr, ROE 22.5%, and Now Eyeing Booze? The Pepsi Franchisee That’s Getting ‘High’ on Growth

1. At a Glance

If Coca-Cola is the flashy Bollywood hero, then Varun Beverages Ltd (VBL) is the dependable South Delhi topper who quietly buys every Pepsi bottling business on the planet. With a market cap of ₹1.67 lakh crore, Varun Beverages is not just PepsiCo’s biggest franchisee in India—it’s PepsiCo’s biggest franchisee globally.

In Q3 CY25, it posted Revenue of ₹4,897 crore (+1.9% YoY) and PAT of ₹745 crore (+19.6% YoY). The operating margin stayed strong at ~23%, the company kept its ROE at a mouth-watering 22.5%, and debt-to-equity is just 0.12x—lighter than a Diet Pepsi.

But the real fizz? The board just approved amendments to its MOA to enter the alcoholic beverages and renewables business. Yes, the same company that sells Mountain Dew now wants to brew actual spirits. Maybe after quenching India’s thirst, it wants to get it tipsy too.

So let’s pop open this ₹1.6 lakh crore bottle of carbonated ambition and see if it’s all sparkle—or if the fizz is leaking.

2. Introduction

Back in the 1990s, Ravi Jaipuria was bottling Pepsi in India when no one believed soft drinks had a future beyond the Delhi summer. Fast forward to 2025: his company, Varun Beverages Ltd, now bottles everything PepsiCo touches—from Pepsi, 7UP, and Sting to Tropicana, Slice, Aquafina, Lipton Ice Tea, and even Doritos in some markets.

And while most beverage companies stick to one country, VBL behaves like it’s collecting continents. From India to Morocco, Zambia, Zimbabwe, and now South Africa (after acquiring BevCo for ₹13,200 crore in 2024), the company has planted Pepsi’s blue logo across 10 countries.

It’s also turned into PepsiCo’s ultimate “Yes Man.” Pepsi says expand? Done. Pepsi says recycle PET bottles? Done. Pepsi says make potato chips in Africa? Done and salty.

But the latest chapter is wild. The Q3 CY25 results came with an unexpected plot twist: VBL’s MOA now includes alcoholic beverages, renewables, and packaging. Yes, Pepsi’s sober partner wants to go tipsy—possibly exploring partnerships for Carlsberg distribution in Kenya and beyond.

Can you imagine “Varun Premium Lager – powered by Pepsi”? If that happens, cola wars might finally get interesting.

3. Business Model – WTF Do They Even Do?

VBL’s business model is simple, scalable, and suspiciously consistent. It bottles, distributes, and sells PepsiCo products—and does so with military precision.

How it works:

• Franchise Rights: Exclusive rights to manufacture, bottle, and distribute Pepsi products in India and 9 other countries.
• Backward Integration: Makes its own preforms, crowns, plastic closures, corrugated boxes, crates, and shrink-wrap films. Even its packaging is vertically integrated—because when margins are tight, efficiency is sexy.
• Global Operations: India contributes ~83% of revenue, Africa (Morocco, Zambia, Zimbabwe, and South Africa) makes up the rest. The South African BevCo acquisition expanded its empire into Lesotho, Eswatini, Namibia, Botswana, and Mozambique.
• Product Mix:
  • Carbonated Soft Drinks – 76%
  • Packaged Water – 16%
  • Juices – 8%

Fun fact: In Q1 FY25 alone, sales volumes grew 28% YoY—including 28 million new cases from BevCo. That’s more bottles than the number of times Pepsi changes its tagline.

And now, as if 36 Indian plants and 12 overseas factories weren’t enough, VBL is dabbling in alcoholic drinks and renewable energy. One factory for beer, one for solar panels—talk about diversified hydration.

4. Financials Overview

Commentary: The summer quarter (Q2) is always the blockbuster; Q3 brings the hangover. But PAT growing 18% despite flat revenue shows just how operationally tight this company is. When your margins are more stable than Sensex on a good day, you’re doing something right.

5. Valuation Discussion – Fair Value Range Only

Let’s crunch the fizz with some frothy math.

Method 1: P/E Valuation

• EPS (TTM): ₹8.78
• Current P/E: 56.5
• Industry P/E: ~90 (because FMCG stocks are priced like luxury watches)

👉 Fair Value Range = 8.78 × (45–70) = ₹395 – ₹615

Method 2: EV/EBITDA

• EV = ₹1,67,661 Cr
• EBITDA = ₹4,986 Cr
• EV/EBITDA = 31.7x (premium over FMCG peers ~25–35x)

👉 Fair Value Range = 28x–35x EBITDA = ₹440 – ₹550

Method 3: Simplified DCF
Assume 15% profit growth for 5 years, terminal 5%, CoE 11%.
👉 DCF Fair Range = ₹450 – ₹580

✅ Fair Value Range (Educational Purpose Only): ₹440 – ₹615
Disclaimer: This fair value range is for educational purposes only and not investment advice.

6. What’s Cooking – News, Triggers, Drama

In typical Varun Beverages fashion, they don’t just make announcements—they drop