Varun Beverages outperforms index; territory acquisition to boost earnings

Varun's market share in terms of selling PepsiCo India's products would shoot up to over 80 per cent from 51 per cent earlier

In the past five trading sessions, the stock of Varun Beverages — Indian maker of PepsiCo soft drinks — rose three per cent against a 1.4 per cent fall in the BSE FMCG (fast-moving consumer goods) index. The company recently approved the acquisition of PepsiCo India’s franchise rights in the southern and western regions. This turned investors’ sentiments positive on the stock, with expected traction in overall earnings as the deal is expected to be earnings accretive in the long term.

One of the major downsides for the business of Varun Beverages (Varun) is the seasonality factor.