Varun Beverages Ltd, one of the prominent bottling partners for PepsiCo and a constituent of the NIFTY NEXT 50 index, is currently experiencing notable market movements. On 29th April 2025, the stock traded at Rs 527.50, reflecting a 1.08% decline, even as trading volumes surged, indicating heightened investor activity and possibly mixed sentiment among market participants.

Recent Market Activity and Price Movement

As of today’s session, Varun Beverages is down by Rs 5.75 from the previous close, closing at Rs 527.50. The decline of 1.08% comes on the back of increased trading volume, which often signals a shift in investor sentiment or reactions to underlying financial indicators.

Sentiment analysis over the last few sessions has shown volatility:

• 24 April 2025: Neutral sentiment, price at Rs 532.35

• 25 April 2025: Very bearish sentiment, price fell to Rs 521.95

• 28 April 2025: Neutral sentiment, slight recovery to Rs 533.20

• 29 April 2025: Neutral sentiment, but minor fall to Rs 527.15

This pattern suggests investors are cautious, waiting for more clarity on future earnings growth and sustainability.

Strong Revenue and Net Profit Growth

Despite short-term price pressure, Varun Beverages’ long-term financial trajectory remains impressive, particularly in terms of revenue and net profit:

• Revenue Growth (2020–2024):

  • 2020: Rs 6,450.14 Cr

  • 2024: Rs 20,007.65 Cr

  • Over 3x increase in just four years

• Net Profit Growth (2020–2024):

  • 2020: Rs 423.80 Cr

  • 2024: Rs 2,635.76 Cr

  • More than 6x increase

These figures show the company's strong operational expansion, especially across key markets where its beverages dominate the retail and FMCG landscape.

Fluctuating EPS Raises Concerns

While revenue and profits have increased, earnings per share (EPS) shows a worrying trend. The EPS, which indicates the company's profitability per share, peaked in 2022 but has since fallen:

• 2020: Rs 11.40

• 2021: Rs 16.03

• 2022: Rs 23.05

• 2023: Rs 15.83

• 2024: Rs 7.95

This sharp decline in EPS in 2024, despite rising profits, may indicate share dilution, rising expenses, or lower margins, which could be why the market remains skeptical.

Q4 FY2024 Performance Breakdown

The company reported strong revenue growth in the last quarter ending December 2024, but profits and EPS did not follow the same trajectory.

• Revenue:

  • Dec 2023: Rs 2,667.69 Cr

  • Dec 2024: Rs 3,688.79 Cr

  • 38% YoY increase

• Net Profit:

  • Dec 2023: Rs 143.55 Cr

  • Dec 2024: Rs 196.33 Cr

  • 37% YoY increase

• EPS:

  • Dec 2023: Rs 1.02

  • Dec 2024: Rs 0.56

  • 45% decline, despite higher profits

The discrepancy between EPS and profit growth signals structural issues, such as higher equity base or cost pressures, which may be weighing down shareholder returns.

Key Financial Ratios – Year-End 2024

An examination of key financial metrics reveals additional insights into Varun Beverages' financial health:

• Basic EPS:

  • 2023: Rs 15.83

  • 2024: Rs 7.95

  • Almost 50% decline

• Book Value per Share:

  • 2023: Rs 54.53

  • 2024: Rs 49.12

  • Suggests weakened balance sheet fundamentals

• Dividend per Share:

  • 2023: Rs 2.50

  • 2024: Rs 1.00

  • Indicates lower payouts to shareholders

• Debt-to-Equity Ratio:

  • 2023: 0.75

  • 2024: 0.14

  • Substantial reduction in leverage, which is positive from a risk perspective

While the lower debt levels indicate conservative financial management, the drop in dividends and book value may be a concern for income-focused investors.

What This Means for Investors

For long-term investors, Varun Beverages offers strong revenue growth potential, thanks to its expanding market presence and established distribution networks. However, the EPS decline, lower dividends, and weakening book value raise red flags regarding capital efficiency and shareholder returns.

The high trading volume amid a declining stock price indicates mixed investor sentiment, likely driven by:

• Strong topline growth

• Concerns over earnings quality

• Lower shareholder rewards

Conclusion: A Stock Worth Watching, but With Caution

Varun Beverages’ fundamentals — especially revenue and profit growth — remain strong. However, falling EPS, shrinking dividends, and concerns around value creation per share may make investors hesitant in the near term.

As part of the Nifty Next 50, Varun Beverages remains a key stock to watch, especially if management addresses margin compression or improves EPS performance in upcoming quarters. For now, cautious optimism seems to be the market’s stance.

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