What does extension of PepsiCo's agreement mean for Varun Beverages?

Varun Beverages' share price is buzzing in Friday’s trading session after the company secured a landmark agreement with PepsiCo Inc. The share price made a 52-week high of ₹538 apiece on the NSE. The shares have returned over 8% in 2026 on a YTD basis after investor optimism increased. Here is why investor sentiment improved around the stock after a landmark development

What is the agreement?

The exclusive bottling agreement and trademark licensing agreement is key bridge between Varun Bevrages (VBL) and PepsiCo Inc ltd which allows VBL to manufacture and sell food and beverage PepsiCo’s product. The agreement that was initially signed in 2019, which was set to expire in 2039, now extended to 2049. More than agreement extension, the removal of restrictions on out of the brand PepsiCo’s operations was a major sentiment booster. VBL’s more than 90% of the business comes from operations of PepsiCo.

The previous agreement restricted VBL conducting any business outside PepsiCo’s operations, making it act as a special purpose vehicle (SPV). According to the new agreement, the restriction is removed, which allows VBL to diversify into different industries and explore partnerships with other brands and companies.

Why is it important?

The key strength of VBL’s success in expanding PepsiCo’s network in India and globally lies in its vast distribution network. Varun Beverages Ltd is PepsiCo’s second largest franchise globally. It holds franchise operations in 10 countries and distribution rights in 4 different countries as well. The company has 40+ plants across country to deliver products across last mile connectivity. In addition, VBL products are stacked across 4 million retail outlets across the country, which is ~33% of the total FMCG retail outlet universe. With removal of restriction in the renewed agreement, it gives VBL headroom for growth associations with other brands and diversify its revenue stream, which currently is concentrated with PepsiCo’s operations.

Key financials

In FY26, the company sold 1,213 mn cases, growing 23.3% CAGR in five years from 2020. Over the same period, the company has also increased its international business operations spanning key nations in Africa. In the Q1 CY2026, the company’s revenue jumped 18.1% YoY to ₹6,574.2 million with an EBITDA growth of 21% YoY to ₹1,528 crore. For CY2025, the company’s revenue stood at ₹21,685 crore, up 8.4% YoY from ₹20,007 crore in CY2024. For CY2025, the pofitability improved to ₹3,100 crore from ₹2,600 crore in the CY2024.