Strong season, new markets to drive gains for Varun Beverages' stock

Operating leverage, product mix to offset raw material pressures, say brokerages

Multinational giant PepsiCo’s strong June quarter earnings commentary is positive for its India franchise -- Varun Beverages Limited (VBL). The global food, beverages and snack giant indicated that its developing and emerging market sales were resilient, delivering a double digit organic revenue growth across multiple countries, including India.

After a 26 per cent revenue growth in the last quarter, the company is expected to put up a strong show for the second consecutive quarter. Analysts, led by Anand Shah of Axis Securities, estimate the company’s June quarter (peak season) revenue growth to come in at 86 per cent year-on-year (YoY).