Varun Beverages (VBL) started CY19 on a good note with robust delivery (ahead of our estimates) in Q1CY19 led by healthy performance in India business (despite extended winter drag on domestic volumes) and strong performance in international business (led by Zimbabwe and Morocco). Near-term catalysts include consolidation of recently-acquired South\/West territories (including margin\/revenue scale-up potential), portfolio de-risking through scale-up of NCB portfolio (Tropicana, Sting etc.) and sustained momentum in international business. We expect VBL to become FCF positive in CY20 and RoCE to inch up to 20% in CY21. We have \u2018Buy\u2019 with a revised TP of Rs 1,050 (Rs 1,000 earlier) based on 13x target EV\/Ebitda; our EPS estimates go up by 3-4%. VBL delivered a strong and ahead-of-estimates quarter led by robust revenue beat; both domestic and international business posted beat partly led by higher-than-expected realisation growth y-o-y on better mix and currency depreciation in Zimbabwe. Consolidated revenue grew 24% y-o-y led by 12.3% volume growth to 90.3 million cases and 11.8% price\/mix-led growth. Standalone (India) business delivered 10% y-o-y growth in revenue (despite extended winter, led by 4.6% volume growth) to Rs 9.9 bn, Ebitda grew 16% y-o-y to Rs 1.9 bn as margin expanded 100 bps to 19.3% (despite 230 bps dip in gross margin, led by margin scale-up in territories acquired last year) and PAT increased 66% y-o-y to Rs 555 mn. Consolidated revenue grew 24% y-o-y to Rs 13.6 bn, Ebitda grew 26.5% y-o-y to Rs 2.2 bn and PAT grew by 111% to Rs 406 mn. Ebitda margin grew 30 bps y-o-y to 16.1% aided by 80 bps y-o-y expansion in gross margin. VBL has completed the acquisition of franchise rights of South\/West territories from PepsiCo effective May 1, 2019 (7 states and Union territories).