IGI Logo

We retain BUY on VBL and our SOTP-based target price of Rs615. This is led by our expectation of ~14% organic EBITDA CAGR (CY25-27E) and potential inorganic growth accretion, helped by a debt free balance sheet (vs 0.8x D/E historically). Encouragingly, volumes returned to double-digit growth (~10%), with potential acceleration in growth momentum in CY26. Overall, the EBITDA beat of 4% was led by better International performance, while adjusted India EBITDA was largely in-line. VBL highlighted an aggressive growth push with new launches (new flavors/Jeera), pack upsizing, and launch of Rs10 pricepoint in specific pockets, well supported by enhanced distribution/capacity (up 40-45%) and ATL campaigns during the CY26 season. Considering the high competition, we like VBL’s preference for volume share protection, albeit at the cost of a 3-4% realization dip and a 1-3% cut in our EBITDA estimate. Despite a subdued CY25 and additional costs related to new capacity expansion, VBL has executed well with stable EBITDA margin in CY25, and expects to offset incremental growth investments in CY26 with the benign crude and operating leverage. Twizza acquisition/foray into alcobevs is not built into our estimate and is being factored in separately with Rs15/20 in our SOTP TP (Exhibit 1).

Better International growth drives the ~4% EBITDA beat to Q4 estimates VBL’s revenue grew ~14% to Rs42bn (a ~4% beat), led by ~24% growth in international revenue and ~6% growth in India operations. Consol volume saw ~10% growth, with near-equal growth in both India and Intl operations. VBL’s focus remains on growth acceleration with new launches, including expansion of the energy drinks portfolio, launch of a jeera-based drink, and selective introduction of the Rs10 price-point under the juicebased Nimbooz brand umbrella (5% GST vs 40% for CSD). Realization at Rs177/case was up 3.4%, led by better realization in international business (up 10%), while that in the domestic business was down ~4%, largely due to higher promotions and product upsizing. Consol EBITDA margin was down by 50bps at 15.2% (inline), largely on account of a one-time labor code impact in India business. SA gross-margin dip of ~40bps on account of growth push was completely offset by a ~80bps dip in SG&A.

Twizza acquisition to support margin expansion VBL highlighted that the proposed acquisition of Twizza will add 70-80% incremental capacity in South Africa through 3 owned manufacturing facilities with backward integration. Unlike existing operations, Twizza owns its land, buildings, and logistics fleet, and uses solar power, which is expected to lower freight, lease, and energy costs. With production closer to key markets (8 locations vs 5 now), VBL expects meaningful logistics efficiencies, better route-to-market reach, and improvement in international margins over the next couple of years. VBL expects its International EBITDA margin to gradually move toward the India EBITDA margin, from ~18% currently.

For More  Emkay Global Financial Services Ltd Disclaimer http://www.emkayglobal.com/Uploads/disclaimer.pdf & SEBI Registration number is INH000000354