Varun Beverages: El Niño-led heatwaves may drive demand; target price
MOFSL noted that VBL is shifting from a pure-play beverage bottler to a broader consumer distribution platform, leveraging its network to scale across multiple product categories.
- Mar 18, 2026,
- Updated Mar 18, 2026 8:22 AM IST
Varun Beverages Ltd: The El Niño-Southern Oscillation (ENSO) setup heading into the FY27 kharif season indicates rising El Niño probabilities, reaching 58-61 per cent during May-July. El Niño conditions in 2023 led to weaker monsoon activity and prolonged dry spells across several Indian states, resulting in heatwave conditions. MOFSL in a fresh note said the potential heatwaves and weaker monsoons could drive demand for refreshing beverages, creating a favorable consumption environment for PepsiCo bottler Varun Beverages Ltd (VBL).
The domestic brokerage noted that 2025 was a subdued year for VBL, as unusually heavy rainfall led to weak beverage consumption, resulting in modest volume growth of 8 per cent in the consolidated business and 2 per cent in India, with realisations remaining largely flat.
"However, the long-term growth story remains intact, supported by structural drivers such as retail expansion, improved electrification, portfolio diversification, expansion into adjacent consumer products, and stronger cold-chain infrastructure," MOFSL said.
VBL shares are down 18 per cent in 2026 so far. The domestic brokerage suggested 'Buy' on VBL and a target of Rs 550, hinting at 55 per cent potential upside.
MOFSL noted that VBL is shifting from a pure-play beverage bottler to a broader consumer distribution platform, leveraging its network to scale across multiple product categories.
The Carlsberg partnership, it said, signals a potential entry into beer in select African markets. Additionally, by manufacturing visi-coolers, VBL is vertically integrating its cold-chain capabilities to support long-term growth. It said international business is now growing faster than India, with volume contribution rising to 31 per cent in 2025 from 21 per cent in 2020. Consequently, the revenue share from subsidiaries increased to 38 per cent, with revenue expanding at a 35 per cent CAGR over 2020–25.
"Overall, while weather conditions are expected to normalize, the potential emergence of El Niño–driven heatwaves could create a favorable demand environment for the company, supported by new production capacities, backward integration initiatives, and ongoing distribution expansion," MOFSL said.
Varun Beverages Ltd: The El Niño-Southern Oscillation (ENSO) setup heading into the FY27 kharif season indicates rising El Niño probabilities, reaching 58-61 per cent during May-July. El Niño conditions in 2023 led to weaker monsoon activity and prolonged dry spells across several Indian states, resulting in heatwave conditions. MOFSL in a fresh note said the potential heatwaves and weaker monsoons could drive demand for refreshing beverages, creating a favorable consumption environment for PepsiCo bottler Varun Beverages Ltd (VBL).
The domestic brokerage noted that 2025 was a subdued year for VBL, as unusually heavy rainfall led to weak beverage consumption, resulting in modest volume growth of 8 per cent in the consolidated business and 2 per cent in India, with realisations remaining largely flat.
"However, the long-term growth story remains intact, supported by structural drivers such as retail expansion, improved electrification, portfolio diversification, expansion into adjacent consumer products, and stronger cold-chain infrastructure," MOFSL said.
VBL shares are down 18 per cent in 2026 so far. The domestic brokerage suggested 'Buy' on VBL and a target of Rs 550, hinting at 55 per cent potential upside.
MOFSL noted that VBL is shifting from a pure-play beverage bottler to a broader consumer distribution platform, leveraging its network to scale across multiple product categories.
The Carlsberg partnership, it said, signals a potential entry into beer in select African markets. Additionally, by manufacturing visi-coolers, VBL is vertically integrating its cold-chain capabilities to support long-term growth. It said international business is now growing faster than India, with volume contribution rising to 31 per cent in 2025 from 21 per cent in 2020. Consequently, the revenue share from subsidiaries increased to 38 per cent, with revenue expanding at a 35 per cent CAGR over 2020–25.
"Overall, while weather conditions are expected to normalize, the potential emergence of El Niño–driven heatwaves could create a favorable demand environment for the company, supported by new production capacities, backward integration initiatives, and ongoing distribution expansion," MOFSL said.