Varun Beveregas - PepsiCo Bottler - A consistent compounder?

This is my first topic that I have created on VP and would like to get opinions on Varun Beverages Pvt Ltd, the franchisee bottler for Pepsico in India with a market cap of 17,000 cr

Some positives:-

  1. Low per capita consumption at 44 bottles in India in 2016-17 against 1,496 bottles in USA and 537 bottles in Brazil offer a huge growth opportunity.
  2. Further, grossly untapped rural areas and rising in-home consumption (~40 per cent of total market consumption) offers opportunity for category growth and expansion over the medium to long term.
  3. Health conscious energy drinks – which are slowly becoming more popular in the west, have still quite a bit of catching up to do in India.
  4. Varun beverages is not just reliant on carbonated drinks alone and also has bottled water ( Acqufina ), Tropicana, Gatorade, Quaker oat milk
  5. Q4 ’19 results were positive as compared to last year 23% uptick in sales

Some negatives:-

1)While sales and profits have been consistently growing at 20% + since the last few years, there is a decent amount of capex and debt on the books.
2) D/ E is around 1 now and they do not seem to be in expansion mode in India with already 80%+ volume share in PepsiCo.
3) Growth could be influenced by territories like Nepal, Sri Lanka, Morocco, Zambia and Zimbabwe – where it would be more difficult to analyse the market than India
4) Q1 is historically their most significant quarter being the summer season and drives key metrics for the FY. There could be a decent sized blow due to the virus

Key links below for reference:-

Company overview

Product overview

Business standard recent article:-

PWC report on non-alcoholic beverages:-

Screener :-

Request esteemed members like @Donald Sir, @phreakv6, @basumallick, @ankitgupta to provide their views on Varun Beverages for a period of 5-10 years.

With pepsico being the kind of steady compounder that many marquee investors have favoured in the US, does Varun Beverages provide a similar kind of outlook in a growing economy like ours

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I had looked at it a while ago and came across this. A no go for me due to this. Though it’s Nepal, the names involved seem all Indian names. There is never only one cockroach.