VBL has 10% Market share in India Volumes & the key player in the Beverage Industry. They have long Agreement with PepsiCo since 1999 and now have expanded in some international territories. They are the largest distributors of PepsiCo Ex-US. Their sales in 2012 were 1850 Cr and Profits were 250 Cr. This Year we may see the sales of more than 8000 Cr and Profits of 600 Cr shows high growth of around 17% CAGR. Sales are growing good, but profits are highly volatile due to low margins and some debt. Their Profit Margin move in the large range of -15% to +5% and during past 8 years also they made losses 2 times. Their Portfolio is majorly from 71% Carbonated soft drinks like Pepsi, 7-UP. Mirinda and Mountain Dew. 23% sales comes from Packaged drinking water like Aquafina as well as 6-7% from Fruit Juices.
Last Year sales were highly affected due to Covid-19, but in Q4 we have already seen Lifetime high quarterly sales which reflected again in Q1, Yes They are back in the high growth game. Q1 sales were also extraordinary and as expected as they got a big jump of 34% & hence profits shoot up by 87%. Amazing Results, and it shows as India move towards Normal this would be the sector of high growth. We may see again lifetime high sales this year along with shoot up in profits.
We have always recommended buying lesser quantity as if you give them full marks for high growth we should not forget that they are with debt of around 2000 Cr which is not less, should not give weightage of more than 1% in portfolio. Those holding since IPO near 300 just 5 years back or have added during the current fall near 500 (61.8% retracement) new buying again can be done during any fall near 800 (Upgraded from 720) and can hold it for long to see Multi year rally. Near term this year target could be 1247 while in the next few years we may see the rally towards 2100. Yes this company could do sales of more then 25000 cr till 2030 and hence can give boost to profits. Please remember that rally would be high volatile due to lesser margins and high debt.
Bonus of 1 share on 2 has been announced.
Ravikant Jaipuria who is the promoter of VBL as well as some other major chains like KFC is even looking to come of with their IPO in coming years.