What caused the 5% decline in Varun Beverages (VBL) today?
Varun Beverages: One of the leading large-cap stocks involved in the manufacturing, bottling, and distribution of carbonated and non-carbonated beverages has experienced a significant drop of nearly 18 percent in the current calendar year of 2025. This article aims to delve into the potential reasons behind the decline in the company’s share price.
Stock Price Movement
During Friday’s trading session, Varun Beverages Limited witnessed a sharp decline of 4.07 percent from the previous closing price of Rs. 574.40. The stock opened at Rs. 580.75 and is currently trading at Rs. 551, with a daily high of Rs. 580.75 and a low of Rs. 545.40.
The market capitalization of the company now stands at approximately Rs. 1,86,321.20 crore, with the stock trading below 19.10 percent of its 52-week high.
Company Overview
Varun Beverages Limited (VBL) is a prominent player in the beverage industry and holds the distinction of being the second-largest franchisee of PepsiCo globally, outside the United States. The company has a strong presence across India, operating in 27 states and 7 union territories, as well as an international footprint in countries like Nepal, Sri Lanka, Morocco, Zambia, and Zimbabwe.
Offering a diverse range of beverages, including popular carbonated drinks like Pepsi, 7up, Mirinda, and Mountain Dew, non-carbonated options such as Tropicana juice and Aquafina water, and dairy products like Cream Bell Milkshakes, VBL caters to a wide range of consumer preferences.
What’s the News?
Varun Beverages Limited’s stock P/E ratio of 72.9 is nearly double the industry average of 32.7, causing concern among investors. This elevated P/E ratio prompted profit-taking, resulting in an 18 percent decline in the stock price since the beginning of the year.
Furthermore, the management’s projection of a slower growth rate in the second half of the financial year 2025 has contributed to the negative sentiment surrounding the stock.
Varun Beverages is set to expand its production capacity in the Democratic Republic of Congo (DRC), aiming to double its current capacity to over 70 million cases by next year. This expansion will significantly enhance the company’s market presence.
In terms of product development, Varun Beverages is planning to launch new products such as Jeera Masala Soda in partnership with PepsiCo and reintroduce Nimbu Masala Soda. The company is also prioritizing low-sugar options, with 49 percent of its product portfolio falling into this category.
To address its current net debt of over Rs. 6,000 crore, Varun Beverages intends to utilize funds from a Rs. 7,500 crore Qualified Institutional Placement (QIP) to reduce its debt. The company aims to maintain a debt-to-equity ratio of 1.0x for future acquisitions. Additionally, Varun Beverages is looking to expand its snack business in Africa to capitalize on the region’s growth potential.
In terms of financial performance, Varun Beverages has seen a 24.13 percent increase in revenue, from Rs. 3,871 crore in Q2 FY24 to Rs. 4,805 crore in Q2 FY25. The net profit has also grown by 22.37 percent, rising from Rs. 514 crore in Q2 FY24 to Rs. 629 crore in Q2 FY25.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.