Organic growth, expanding distribution reach add fizz to Varun Beverages

Despite the ongoing slowdown, the company has posted strong organic growth in the past couple of quarters

One name which is catching investor attention in the consumption space is Varun Beverage — PespiCo’s India franchise. The stock has surged 45 per cent rise in the last one year, mainly led by acquisition of PepsiCo’s south and west territories in India. However, with a strong improvement expected in return ratios, the stock is likely to see further upsides.

As per Bloomberg poll of analysts, the return on equity (RoE; a profitability indicator) of Varun Beverages is likely to go up to 19 per cent by CY2021 from 15.5 per cent in CY2018, led by a strong improvement in margins.