Heatwaves May Boost Varun Beverages Demand; Broker Sees Upside
Varun Beverages Ltd could benefit from rising temperatures linked to the El Niño-Southern Oscillation, which is expected to increase the likelihood of heatwaves and weaker monsoons in the upcoming FY27 kharif season. According to a note by Motilal Oswal Financial Services, such weather conditions typically boost demand for refreshing beverages, creating a favourable consumption environment for the PepsiCo bottler.
The brokerage highlighted that 2025 was a weak year for the company due to heavy rainfall, which dampened beverage consumption and limited volume growth. Despite this, long-term fundamentals remain strong, supported by factors like retail expansion, improved electrification, diversified product portfolio, and investments in cold-chain infrastructure. The company is also evolving from a pure bottling business into a broader consumer distribution platform.
Motilal Oswal Financial Services has maintained a ‘Buy’ rating on the stock with a target price of ₹550, indicating significant upside potential. Growth is further supported by international expansion, rising contribution from overseas markets, and strategic initiatives such as partnerships with Carlsberg Group and backward integration efforts. The report adds that potential El Niño-driven heatwaves could further strengthen demand momentum going forward.
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