How a multibagger stock could be a threat to your portfolio
Pepsi and Coca-Cola, a staple of countless Indian television advertisements over the decades, seems set to spill over into the Indian stock markets. Ravi Jaipuria, chairman of RJ Group, began his career as a vendor for Coca-Cola before switching allegiance to Pepsi in the 1990s. His group's flagship company, Varun Beverages, now stands as the largest bottler of PepsiCo's beverages globally, outside the US.
The company produces and distributes a wide range of carbonated soft drinks, non-carbonated drinks, and packaged water under PepsiCo trademarks. In addition to Varun Beverages, the RJ Group controls Devyani International, a franchisee for Pizza Hut, KFC, and Costa Coffee in India. Both companies have caught the attention of investors, but it's Varun Beverages that has seen a significant re-rating, with its stock surging 1,270% since April 2020.
Its P/E multiple soared from 35 times in 2020 to over 100 times by May 2024. In contrast, Devyani International's 47% gain since its September 2021 listing pales in comparison. Varun Beverages' unique position as the only listed bottling vendor for a global beverage brand is a key advantage, but there's more to its story.
The company's operations span six countries, including India, Sri Lanka, and Nepal, which account for 85% of total revenues. The remaining 15% comes from its African operations in Morocco, Zambia, and Zimbabwe. The company's extensive network covers urban, semi-urban, and rural markets, supported by 37 manufacturing facilities in India and six internationally.
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