Research Report

2023

Research Analyst: Jayesh suryawanshi Mail ID: jayeshdsuryawanshi@gmail.com

 reex
CMP*($) 167
Equity Research 24th dec, 2023

(Upside) 17.6% FY23 UPDATE

Nike, Inc.
Industry:
Average Footwear & Accessorie
Volume 5,762,871s BUY
Target price:
PE Ratio (TTM) NASDAQ: PEP $ 195.64
15.44

KEY CHANGES Target Earnings

Company Profile Company Data

PepsiCo, Inc. engages in the manufacture, marketing, distribution, and sale of
various beverages and convenient foods worldwide. The company operates Market Cap 230.537B
through seven segments: Frito-Lay North America; Quaker Foods North
America; PepsiCo Beverages North America; Latin America; Europe; Africa,
Outstanding Shares 1374.
Middle East and South Asia; and Asia Pacific, Australia and New Zealand and
Free Flot 12.9
China Region. It provides dips, cheese-flavored snacks, and spreads, as well
as corn, potato, and tortilla chips; cereals, rice, pasta, mixes and syrups,
52 Weeks High 155.3
granola bars, grits, oatmeal, rice cakes, and side dishes; beverage
concentrates, fountain syrups, and finished goods; ready-to-drink tea, coffee,
52 Weeks Low 196.6
and juices; dairy products; and sparkling water makers and related products,
as well as distributes alcoholic beverages under Hard MTN Dew brand. The Beta (5 year Monthly) 0.57
company offers its products primarily under the Lay's, Doritos, Fritos, Tostitos,
BaiCaoWei, Cheetos, Cap'n Crunch, Life, Pearl Milling Company, Gatorade,
Pepsi-Cola, Mountain Dew, Quaker, Rice-A-Roni, Aquafina, Bubly, Shareholding % Q3FY23
Emperador, Diet Mountain Dew, Diet Pepsi, Gatorade Zero, Crush, Propel, Dr
Pepper, Schweppes, Marias Gamesa, Ruffles, Sabritas, Saladitas, Tostitos, Institutions holding 71.79%
7UP, Diet 7UP, H2oh!, Manzanita Sol, Mirinda, Pepsi Black, Pepsi Max, San.
Insider Ownership 0.47%
Financial
Others Highlight 27.74%
revenue by country
Total 100%
60,000
50,000
40,000 Direct & Indirect Expenses
30,000
20,000
Operating overhead
10,000 expense
0 27%
2019 2020 2021 2022 2023E 2024E 2025E Cost of
Sales 64%
United States Mexico Russia
Demand
Canada China (b) United Kingdom creation
expense9%

Fundamentals of the Company

Particulars 2020 2021 2022 2023E 2024E 2025E
Revenue $Mn 70,372 79,474 86,392 90,712 95,247 100,010
YOY Grouth % 12.9% 8.7% 5.0% 5.0% 5.0%
Operating Profit 10,080 11,162 11,512 12,088 12,692 13,327
Net Earnings $Mn 7,175 7,679 8,978 9,427 9,898 10,393
Stories in Chart

Key Highlights/Comments

1) Revenue was impacted for 2020 due

to Covid-19 and overall growth was
estimated to be 5.0% for 2023 and
expected in 2024 is 5.0% and in 2025 is
5.0%.

2) company has maintained a consistent

8
Earning per share 7.12
7.47 average EPS (Earning Per Share) was in
6.78
6.45 2020 5.14 and in 2021 was 5.51 and 2022
5.51
6 5.14 was 6.45 and estimated is for year 2023 is
6.78 and expected in 2024 and in 2025 is
4 to be 7.12 and 7.47.
2
3) PepsiCo, Inc. Property Plant &
0 Equipment figures are progressing over
2020 2021 2022 2023E 2024E 2025E
the years as Company plans to manage
Cash effectively and rationalize Capex by
operating profit investing in assets and R&D effectively.
Estimated Property Plant & Equipment is
15,000 1,167mn$ and its Capex is 2,730 for year
10,000 2023.

5,000
4) Company’s repayment of debt is
0 proving YoY resulting in low long-term
2020 2021 2022 2023E 2024E 2025E
Series1 10,080 11,162 11,512 12,088 12,692 13,327

5) the company boasts strong

PROPERTY PLANT & EQUIPMENT profitability, exceeding industry averages,
1,250
1,205 andmaintains healthy financial leverage.
1,200 1,171 1,183
1,167
1,142
1,150 1,130 1,123 Key Financial Summary
1,100

1,050
2019 2020 2021 2022 2023E 2024E 2025E

long term debt

40,370
42,000
40,000
35,657
38,000 36,026 35,657 35,657 35,657
36,000
34,000
32,000
2020 2021 2022 2023E 2024E 2025E
Result Update: PepsiCo Inc.

Income Statement Cash Flow Statement

Balance sheet
BUSINESS MODEL CANVAS: PepsiCo Inc. (PEP)
1. Key Partnerships: 2. Key Activities:

• Suppliers of raw materials (milk, soya, canola, etc.) • Research and development for innovative product design
• Manufacturing partners and factories worldwide and technology
• Retailers and distributors • Manufacturing and quality control processes
• Endorsed athletes, sports teams, and sponsorships • Marketing and advertising campaigns
• Retail operations and online sales platforms

3. Key Resources: 4. Value Propositions:

• Brand reputation and recognition • PepsiCo offers a wide range of food and beverage products,
• Intellectual property (patents, trademarks) including iconic brands like Pepsi, Lay’s, Gatorade.
• Design and innovation teams • PepsiCo is committed to innovation and
• Global supply chain network continuous product development.
• Retail stores and online platforms • Commitment to sustainability and corporate social
responsibility

5. Customer Segments: 6. Channels:

• Athletes (professional and amateur) • PepsiCo distributes its products through a vast network of
• Fitness enthusiasts retail channels, including supermarkets, hypermarkets,
• Fashion-conscious consumers convenience stores, drugstores, and mass merchandisers.
• Family-oriented Shoppers • Wholesale to retailers and distributors
• Marketing and advertising through various channels (TV,
social media, events)
• Sponsorship and endorsement deals

7. Customer Relationships: 8. Revenue Streams:

• Strong brand engagement through marketing • PepsiCo's beverage portfolio includes iconic brands such as
campaigns and social media presence Pepsi, Mountain Dew, Gatorade, Tropicana, and Aquafina.
• Providing exceptional customer service is • PepsiCo's snack brands include Lay's, Doritos,
essential for maintaining positive relationships Cheetos, Ruffles, Tostitos, and Quaker.
• Customer support and service
• Licensing and Trademark Agreements

9. Cost Structure: 10. Key Metrics:

• Cost of goods sold (manufacturing, raw • Sales revenue and growth

materials, labor) • Market share and customer acquisition
• Marketing and advertising expenses • Return on investment (ROI) for marketing campaigns
• Research and development costs • Brand perception and customer satisfaction
• Operational expenses (salaries, rent, utilities) • Sustainability goals and achievements
• Distribution and logistics costs
SWOT Analysis of PepsiCo, Inc.

Strengths:
• Powerful Brand Image: PepsiCo boasts one of the most valuable and recognized
brandsglobally, synonymous with athletic excellence and cultural relevance.
• Product Innovation: PepsiCo has a long history of pioneering new technologies
and designs in footwear, apparel, and accessories, driving market trends and
consumerdemand.
• Global Presence: PepsiCo operates in over 200 countries, granting it vast market
reachand diverse revenue streams.
• Marketing and Advertising: PepsiCo campaigns are consistently impactful and
resonate with their target demographics, building brand loyalty and generating
excitement.
• Efficient Supply Chain: PepsiCo utilizes a lean and efficient supply chain,
maximizingprofitability and minimizing production costs.

Weaknesses:
• Competition: It has heavy opposition from Coca-Cola in its soft drinks category. They are constantly neck
to neck with each other. This competition thereby offers room for not so loyal client base to
exchange brands quickly.
• Product Dependence: They are only present in the food and beverage industry, which can ultimately be
harmful. They need to diversify into other product segments to become global leaders.
• Failed Products: Many failed products such as ‘Crystal Pepsi’ hurt the brand image of PepsiCo and
thereby giving room for the competitors to grow.
• Brand Ambassadors: Wrong feedback or sick overall performance by well-
known personalities/celebrities, in turn, may harm the brand image of PepsiCo as they’re the face of the
organization. Over-dependence on celebrities for endorsements is a massive risk.
Opportunities:
• Healthy Options: They should implement extra fitness-specific ingredients in their products and
make the consumer aware of the same. Diet Pepsi is a superb move in that direction.
• Diversification: Business diversification into exclusive marketplace segments is a massive
opportunity. They have the talent, resources, and economic backing to do the same. This can also
be carried out through acquisitions
• CSR: They can do more CSR activities to tackle the negative remarks that hurt the brand image of
the organization and benefit the local people.
• Flavors: A brand that has risen strongly in the latest years is Paper boat. Paper boat is thought of
for its numerous flavor’s which include watermelon, raw mango, etc
Threats:
• Competitors: PepsiCo’s main competitors are Coca-Cola, Kraft Foods, Nestle, Dr Peppers Snapple
Group, and Mondelez.
• Health Factor: An unhealthy item associated with their product can negatively affect health-
conscious customers and they can lose them. This is evidenced by the decline in sales of soft drinks.
• Economic Slowdown: With the recent reforms in the country PepsiCo might see a drop in its sales
due to a cash crunch in the economy. Other factors such as recession and inflation may also impact
the sales of the company.
• Government Norms: Different norms of different countries might prove difficult to handle and comply
with it as well.

Overall,

Pepsi is a world-famous beverage brand. In recent years, it has expanded its

product portfolio and now includes healthy products in both the snack and
beverage categories. In addition to investments in marketing and digitization,
they have also started making profits, and the brand’s revenue continues to
grow.
 DETAILED REPORT

Food and Beverages

Industry Overview:
PepsiCo products are enjoyed by consumers more than one billion times a day in more than 200 countries and
territories around the world. PepsiCo generated more than $91 billion in net revenue in 2023, driven by a
complementary beverage and convenient foods portfolio that includes Lay's, Doritos, Cheetos, Gatorade, Pepsi-Cola,
Mountain Dew, Quaker and SodaStream. PepsiCo's product portfolio includes a wide range of enjoyable foods and
beverages, including many iconic brands that generate more than $1 billion each in estimated annual retail sales.
Drivers of the Industry:

The food and beverage industry are expected to continue growing in the coming years due to several key drivers.
One of these drivers is the increasing global population, which leads to a higher demand for food and beverages.
As more people are born each year, there will always be a need for sustenance.
Another growth driver is the rise in disposable income around the world. People with more money can afford to
spend more on high-quality food and drinks, leading to an increase in sales for companies that offer those
products. Additionally, consumers are becoming increasingly interested in health and wellness, driving demand for
healthier options.

The Footwear & Accessories market key segments:

By Products:

1. Beverages Key Players in the Industry

2. Food Products
The key players that operate in this market
• Packaged snacks (chips, includes:
cookies, crackers)
• The Coca-Cola Company
• Dairy products (milk, cheese,
• Nestlé Waters
yogurt)
• Starbucks Corporation
• Bakery products (bread, cakes,
pastries) • Kraft Heinz Company
• Unilever
By Distributors:

1. Retail Stores
2. Online Retail
3. Wholesale and Distributors
4. Brand’s Direct-to-Customer (DTC) Channels
5. Specialty Stores and Boutiques

Market Size, Forecast and Trends:

As of May 2024, PepsiCo has a market cap of $244.74 Billion. This makes PepsiCo the world's 44th most valuable
company by market cap according to our data. The market capitalization, commonly called market cap, is the total
market value of a publicly traded company's outstanding shares and is commonly used to measure how much a
company is worth. Social conversations about Pepsi have declined by -17.15% over the past year.17.64% restaurants
offer Pepsi on their menus. The fastest rising consumer need for Pepsi is Snack. The dominating diet for Pepsi is Gluten
Free.
Market Shares by Key Players:

market share

43%
45%

40%

35%

30%
24%
25%

20%

15%

10%
5%
3.50%
5% 2% 2.20% 1.60% 1.50%

0%
Coca-Cola PepsiCo Nestlé AB InBev Starbucks Keurig Dr Suntory Unilever
Pepper
Revenue Driver:
 PepsiCo Inc. Company food and beverage worldwide segment sales were 67,161 $Mn in 2019, 70,372 $Mn in2020,
79,474 $Mn in 2021, 86,392 $Mn in 2022. In 2023 it is expected to be 92,323 $Mn, 98,780$Mn by 2024, 10,5830
$Mn by 2025 i.e., 7.0% of year over year growth.

United states:

Revenue Trend The revenue from the United States has shown consistent growth over the years, increasing from
$36.5 billion in 2017 to $59.2 billion in 2025. This indicates a steady expansion of business operations or
increased market share within the U.S. market.

Percentage of Total Revenue The percentage of total revenue coming from the United States has remained
relatively stable, ranging between 56% and 58% over the years. This suggests that while the U.S. market is
significant, the company's revenue diversification efforts have also been effective in capturing revenue from
other regions.

Year-over-Year Growth The year-over-year growth rates vary, with higher growth rates observed in some years
(e.g., 2021 to 2012 with 10.88% growth) compared to others. Overall, there is a positive growth trend, indicating
successful revenue generation and possibly effective business strategies or market demand.

.
Mexico:

The Mexico segment's contribution to total revenue has fluctuated between approximately 26.6% to 31.4% over
the years, with a slight increase towards recent years stabilizing around 28.6% to 28.9%.

The segment experienced negative growth in 2020 (-6.35%) likely due to economic conditions or specific market
challenges. Significant positive growth was observed in 2021 (16.72%) and 2022 (19.48%), indicating strong
performance or strategic initiatives in those years. Subsequent years (2023 to 2025) have maintained a steady
YOY growth rate of approximately 8.44%, suggesting stable expansion or market maturity.

PepsiCo's Mexico segment has shown resilience with consistent revenue growth over the years, contributing
significantly to the company's overall revenue. Understanding these trends can provide insights into the
segment's performance drivers and potential future prospects.

Greater China:

Revenue Contribution to Total the China segment's contribution to total revenue has grown from 7.20% in 2017
to 13.22% in 2025, indicating its increasing importance within PepsiCo's global revenue mix.

The segment experienced substantial growth rates, especially in 2021 (54.68%) and 2020 (33.23%), driven by
market expansion or strategic initiatives. Despite a slight slowdown in 2022 (2.72%), the growth resumed strongly
in subsequent years (2023 to 2025) at a consistent rate of 23.37% annually.

PepsiCo's China segment has been a significant growth driver, contributing increasingly to the company's overall
revenue. The consistent double-digit growth rates indicate strong market penetration and effective operational
strategies in the region. These insights are crucial for understanding the segment's performance trajectory and
potential future opportunities.

Russia:

Revenue Trend Revenue for PepsiCo's Russia segment has shown fluctuations over the years, with overall growth
observed from 2017 to 2025.Revenue Contribution to TotalThe Russia segment's contribution to total revenue
has ranged from 20.39% to 24.18%, declining slightly over the period but remaining a significant portion of
PepsiCo's revenue mix.

The segment experienced negative growth in 2020 (-7.78%) likely due to economic factors or market conditions.
Strong growth was observed in 2021 (13.86%) and 2022 (20.20%), indicating recovery and expansion efforts.
Subsequent years (2023 to 2025) have maintained a moderate growth rate of approximately 4.96% annually,
suggesting stabilization or steady growth trajectory.

PepsiCo's Russia segment has navigated varying economic conditions and demonstrated resilience with overall
growth over the analyzed period. Understanding these trends provides insights into the segment's performance
drivers and its strategic importance within PepsiCo's global operations.
Canada:

PepsiCo Inc. offers a diverse range of products globally, including beverages (Pepsi, Mountain Dew, Gatorade),
snacks (Lay's, Doritos, Cheetos), and other food products (Quaker Oats, Tropicana). For the Canada segment, the
growth in revenue reflects the success of these products in the Canadian market. The consistent revenue growth
and stable contribution percentage indicate effective market strategies and consumer acceptance of PepsiCo's
product portfolio in Canada.

Revenue Contribution to Total the Canada segment's contribution to total revenue has remained relatively stable
around 20.1% to 20.3%, indicating its consistent significance within PepsiCo's revenue structure.

All other countries

PepsiCo Inc.'s operations span across various international markets with a diverse portfolio of beverages, snacks,
and food products. The growth observed in the "All other countries" segment underscores the effectiveness of
PepsiCo's global strategies and the acceptance of its products in diverse cultural and economic environments.

Revenue Contribution to Total This segment's contribution to total revenue has ranged from 20.19% to 21.05%,
indicating its stable role within PepsiCo's overall revenue composition.

The segment consistently demonstrated positive year-on-year growth rates, with notable increases in 2021
(13.39%) and stable growth rates around 5.47% in recent years (2023 to 2025).

Net Acquisition/Divestiture:

Acquisition: During fiscal 2023, 2022 and 2021, the Company made multiple acquisitions focused on gaining new
capabilities to fuel its Consumer Direct Acceleration strategy, serving consumers personally at a global scale. The
impact of acquisitions, individually and in aggregate, was not considered material to the Company's Consolidated
Financial Statements.

Divestiture: In the last part of 2022, the company sold its businesses in Argentina, Uruguay, and Chile to other
companies. The sale in Chile had little impact in early 2023, but the sales in Argentina and Uruguay, completed
later, caused a total loss of about $550 million.

This loss had two main parts: $389 million recognized in 2020, which was expected due to currency value changes,
and the rest in 2023, caused by the drop in the value of the local currency and cash assets in the sale. After the
sale, the money lost due to currency changes was moved from a different category to the company's overall losses.
The total loss was labelled as Corporate.
Income Statement:

Revenue:
Revenue was $86,392 million in 2022 compared to $79,474 million in 2021, an increase of $6,918 million, or 8.07 %
and estimated $90,712 million in 2023 and expected in 2024 will be $95,247 and in 2025 will be $100,010.

Cost of Sale (COGS):

Includes direct materials and supplies consumed in the manufacturing of product, as well as manufacturing labour,
depreciation expense and direct overhead expenses necessary to acquire and convert the purchased materials and
supplies into finished products. Cost of products sold also includes the cost to distribute products to customers,
inbound freight costs, internal transfer costs, warehousing costs and other shipping and handling activity.

The Cost of goods sold were $40,576 million in 2022, compared to $37,075 million in 2021, an increase of
$3,501 million or 8.62% and estimated $42,605 million in 2023, and $44,735 will be expected in 2024 and in 2025 it will
be $46,972.
Selling, General & Administrative Expenses:
Selling, general and administrative expenses increased $3,222 million, or 9.35%, in 2022 and estimated $36,182
million in 2023 and $37,991 in 2024

Operating Profit/Operating Margin:

Operating Profit was $11.512 million in 2022, compared to $11,162 million in 2021, a Increase of $350 million, or –
3.04% and estimated $12,088 million in 2023 and $12,692.
Interest Expenses (Income):
Interest expenses refer to the costs a company incurs for borrowing money or using debt financing. When a company
borrows money by issuing bonds, taking out loans, or utilizing lines of credit, it agrees to pay interest on the borrowed
amount over a specified period. The interest expense is the cost of using these borrowed funds.
Interest expense was $-939 million in 2022, compared to $-1863 million in 2021, and estimated in 2023 will be $-
986 million, and expected to be in 2024 and 2025 would be $-1035 million and $-1086 million.

Net Income:
Net Income was $8,978 million in 2022, compared to $7,679 million in 2021, a increase of $1,299 million, or 14.46%
and estimated $9,427 million in 2023 and expected in 2024 will be $9,898 and in 2025 will be $10,393.

Earnings Per Shares:

8 7.47
Earning per share 7.12
6.78
7 6.45

6 5.51
5.14
5

0
2020 2021 2022 2023 2024 2025

Basic Net Income Per Share:

The company has maintained the consistent of basic net income per share is $5.14 in 2020, $5.51 in 2021, $6.45 in
2022 and $6.78 in 2023E, $7.12 in 2024E the company has progressive Earning per share.

Diluted Net Income Per share:

The company has also maintained the consistent of diluted net income per share is $5.49 in 2021, $6.42 in 2022,
$6.75 in 2023 and $7.08in 2024E.
Balance Sheet:

Account Receivable:
Accounts Receivable are current asset, so it measures a company’s liquidity or ability to cover short-term obligations
without additional cash flows.
Receivable Increase by 14.63% from 2021 to 2022.but there would be receivable from 2023 with 5% After that,
things got better, and we are expected to recover more money from 2024 onward, and it is predicted to keep
improving until 2025.

Inventories:
Inventories refer to the goods, materials, or products that a company holds for the purpose of resale or use in the
production process. These items are tangible assets that a business acquires, produces, or manufactures to sell to
customers or uses in its operations.
Inventories in Year 2020 was $4,172 mln, and in 2021 was $4,337 mln, and in the year of 2022 $5,222 mln. Estimated
Would be $5,483 in 2023 and expected in 2024 and 2025 would be $5,757 and 6,045.
Prepaid Expenses and other Current Assets:
Prepaid expenses are future expenses that are paid in advance. On the balance sheet, prepaid expenses are first
recorded as an asset. After the benefits of the assets are realized over time, the amount is then recorded as an
expense.
The Prepaid Expenses and Other Current Assets for 2023 is 846 $Mn, 2022 was 889$Mn. The Prepaid Expenses and
Other Current Assets are increase by 5.43% and expected to grow 4.83% in 2024.

Property, Plant and Equipment:

Property, plant, and equipment are long-term assets vital to business operations. Property, plant, and equipment are
tangible assets meaning they are physical in nature or can be touched; as a result, they are not easily converted into
cash.
The net Property, Plant and Equipment for the year 2022 is 24,291 $Mn, and for the year 2021 was 22,407$Mn
there is increase of 7.75% and expected to get increased by 7.84% in year 2023 and 6.75 in 2024.

Short-Term Investments:
We classify time deposits and other investments that have maturities of greater than three months but less
than one year as a short-term investment.
The Short-Term Investment for 2022 is 394$Mn, 2021 was 392$Mn and estimated $414 for 2023 and 434$ in 2024.

Identifiable Intangible Assets:

Intangible assets are those that are non-physical but identifiable. Think of a company's proprietary technology
(computer software, etc.), copyrights, patents, licensing agreements, and website domain names.
Identifiable Intangible Assets are decreased by -2.83% from 2021 to 2022. And it is expected to be maintained as it
from 2023 to 2024,2025. There are slight changes in its growth.

Deferred Income Tax and other Assets:

Deferred Income Tax and Other Assets, in simple terms, are entries on a company's balance sheet that represent
future financial benefits or values that the company expects to receive but has not yet received.
Deferred Income Tax and other Assets are decreased by -2.52% from 2021 to 2022. And it is expected to be
maintainedas it from 2023 to 2024, 2025.
Account Payable:
Accounts payable is money owed by a business to its suppliers shown as a liability on a company's balance sheet. It
is distinct from notes payable liabilities, which are debts created by formal legal instrument.
Payables are increased by -9.46% from 2021 to 2022 but there is significant improvement in payable from 2023.

Accrued Liabilities:
Accrued liabilities refer to expenses that a company has incurred but not yet paid, and these obligations are
recorded in the financial statements as they accumulate over time.

There is decrease in accrued liabilities by -8.0% from 2022 to 2023 but it is expected to be Increased by 7.0% in
2024

Income Taxes Payable:

Income Taxes Payable is the amount of money a company owes to the government for taxes based on its profits or
earnings. When a business earns income, it needs to pay a portion of that income to the government as taxes.
Income Taxes Payable on a company's balance sheet shows the amount it owes for income taxes that have not been
paid yet but are due.

Income Taxes Payable are 222 $Mn in 2022, 240 $Mn in 2023 increased by 8.1% from 2022 to 2023 and expected to
decrease in 2024 by 5.0%.

Deferred Income Taxes:

Deferred income tax liabilities represent the future tax obligations a company expects to pay on income that has
been recognized in financial statements but not yet taxed.

The Deferred Income Tax in 2021 is 4,826$Mn, in 2022 4,133 $Mn there was decrease by -16.73% and expected to be
maintained 4,340 $Mn in 2023 and increased by 27.8% from 2024 till 2025.
 SCHEDULES
Fixed Assets Model (FAM):

Type of Assets:

Tangible Assets - A tangible asset is something you can touch or physically hold that has value and can be used by
a person or a business to generate income. It is a real, physical item that has a monetary worth and is expected to
provide benefits to its owner over time. Tangible Assets such as Property plant & Equipment, Land and building,
furniture, etc.

Intangible Assets - Intangible assets are valuable things that a company owns, but you cannot touch or see them
physically like buildings or machines. They are assets without a physical form. Instead, they represent valuable
rights or long-term benefits that a company has. Intangible Assets such as patent, brand, trademark, or copyright,
etc.
Property, Plant, and Equipment:

Property, Plant and Equipment includes Building, Machinery and Equipment, Land, Construction in progress. Based
on previous year’s average we have forecasted the assets.

The Property plant & equipment cost is 49,784 $Mn in 2022, and 46,826 $Mn in 2021 after deducting the
Depreciation for year 2022 is -25,493 $Mn, and in 2021 is -24,421 $Mn. The net Property Plant & Equipment is
25,291 $Mn in 2022, and 22,407 $Mn in 2022. Net Capex for year 2022 is 2,956 $Mn and 2021 was 488 $Mn.

Land and improvements:

We expect the addition to this asset to be 0.1% of the revenue based on its previous years trend.

Buildings:

Buildings are depreciated over an estimated useful life of 40 years. Estimated useful lives are periodically reviewed
and, when appropriate, changes are made prospectively. We expect the addition to this asset to be 1.4 % of the
revenue based of its previous years trend.

Machinery and equipment:

Machinery and equipment include office furniture and fixtures (15-year life), computer equipment and capitalized
software (3- to 5-year lives) and manufacturing equipment (3- to 20-year lives). We expect to addition in
machinery and equipment to be 3.7 % of revenue based on its previous year trend.

We anticipate a 3.7% increase in machinery and equipment additions, consistent with the trend observed in the
previous year's revenue.

Construction in process:

We expect the addition to this asset to be 1.2% of the revenue based on its previous years trend.

Depreciation:

Depreciation expenses is expected to be in line with respect to the previous year’s depreciation expenses as % of
net assets that is -2.4% of the net asset for the future forecast. Total accumulated depreciation sees increased
over the years during the forecast due to significant number of additions made to its asset’s classes by PepsiCo
INC.company which is turn Increase asset in balance sheet.
Debt Repayment Schedule (DRS):
fiscal year 2022, the overall long-term debt stands at $35 billion, compared to $40 billion in fiscal year 2020.
Anticipated modifications in issuance and repayment are projected to result in a decrease to $35 billion in fiscal
year 2023.

The total issuance is $ 1001mln in FY 2022 and previous year’s issuance is -$1020mln in FY 2021 and $421mln in FY
2020.And it is expected to be $949mln in FY 2023.

Repayment during the FY 2022 is $-4113 and previous year’s repayment was -28,152 in FY 2021. Repayment is
expected to be $-3970bln in FY 2023.
Equity Schedule

Common Stock:

Common stock shares represent ownership in a company and typically come with voting rights at shareholder
meetings. The amount of common stock is the total number of shares issued by a company, reflecting the equity
ownership available to investors in the open market. and stand at $23 Mn.
Capital in Excess of Stated Value:

Capital in Excess of Stated Value (CESV) refers to the amount of money received by a company for its issued shares
that exceeds the stated value (also known as par value) of those shares. It represents the additional premium paid
by investors above the minimum price set by the company. and stand at $4,134 Mn.

Accumulated Other Comprehensive income/Loss:

Accumulated Other Comprehensive Income (AOCI), also known as Accumulated Other Comprehensive
Income/Loss, represents the unrealized gains and losses that have not yet been reflected in a company's net
income, but still impact its total comprehensive income. These items are displayed in the equity section of the
balance sheet, usually listed below retained earnings.

There is an income of $-15.302 Mn as on May 2022.

Retained Earnings:

The net profit attributable to common stockholders comes under it, which is added to the previous year’s closing
balance.

Retained Earnings:

The net profit attributable to common stockholders comes under it, which is added to the previous year’s closing
balance.
Working Capital:

Working Capital:

Working capital, also known as net working capital (NWC), is the difference between a company’s current assets
such as cash, accounts receivable/customers’ unpaid bills, and inventories of raw materials and finished goods
and its current liabilities, such as accounts payable and debts.

Working capital is a crucial financial metric representing the liquidity available to a business for its day-to-day
operations. It essentially shows how well a company can manage its short-term financial obligations, pay off its
bills, and invest in necessary resources.

The total current assets are 16,585 $Mn in 2022, 16,187 $Mn in 2021 and total current liabilities are 26,785
$Mn in 2023, 26,220 $Mn in 2021. So that the working capital of the company is -963 $Mn in 2022, 3,966
$Mn in 2021. That means the company has enough working capital for short term obligation or company has
good short-term health to pay off short-term debt, etc.
Ratio Analysis:
Profitability Ratio:

Revenue YoY growth %:

The revenue growth % is well the industry average of 3.4% for the food and beverage industry sector. AsPepsiCo
sales have seen an increase from FY 2022 the future years will see a significant increase in this ratio.

Gross Profit Margin:

Gross profit margin is a metric analysts use to assess a company's financial health by calculating the amount of
money left over from product sales after subtracting the cost of goods sold (COGS). It is calculated by dividing the
gross profit by total revenue.

Company avg. Gross Profit Margin is 54.8% (2020 to 2022) against Industry average of 40%. Hence it is good.

Operating Profit Margin:

Operating Profit Margin is a profitability or performance ratio that reflects the percentage of profit a company
produces from its operations, prior to subtracting taxes and interest charges. It is calculated by dividing the
operating profit by total revenue.

PepsiCo was able to generate significantly higher operating profit of 13% to 14% from its sale for FY 2020 till FY
2022 and is estimated to continue doing so for the forecasted period as compared to the industry average of
14%.

Net Profit Margin:

The percentages from 2020 to 2025 for PepsiCo show a stable performance metric, mostly around 10.4%. There was
slight dip to 9.7% in 2022, but the values quickly returned to the higher level. Overall, the data indicates consistent
and reliable performance over the period.

Return on Capital Employed (ROCE):

It’s important for investor point of view. EBIT/Capital Employed

In 2020, PepsiCo Inc made 61% cents for every dollar it invested in Total Debt and Equity. This increased to 75.5%
inthe 2021 year and remained at 66.3% in 2022. Looking ahead, PepsiCo is expected to earn about 65.1% for
every dollar invested. This means, for every $100 invested, Nike could make around $65.1 in the future. Using
profit before interest and tax helps us see how well PepsiCo is doing without being influenced by its debts or
taxes. It's a useful way to compare how different companies perform, no matter their financial situations.
 Return on Assets (ROA):

It Implies how much we generate net income using company’s assets. Net Profit / Ave. Total Asset
Nike was able to generate net profits equaling 8.3% from its total assets in FY 2021. For FY 2021 9.2% of net
profits were generated from its total assets. We estimate the ratio to be approx. 8.6% in 2024.

Liquidity Ratio:

Current Ratio: Using the Current asset, we repay our current liability.

The Current Ratio lies between the 0.98X to 0.80X which is well comparing to the industry average of 0.80X. Nike
isable to meet its current liabilities out of its current assets.

Quick Ratio: Represent the liquid assets to repay our current liability.

Quick ratio for FY 2021 was 0.66X, for FY 2022 it decreases to 0.61X. we expect ratio to be above, the industry average
0.6X for the forecasted period in the range of 1.08x to 1.60x.

Cash Ratio: Represent the how much cash we have to repay our current liability.

Cash & Cash Equivalent + Short Term Investment / Total Current Liabilities

Cash ratio for FY 2021 was 0.23x. for the year 2022 it is 0.20X. All of them is above the industry average of 0.2x.

Turnover Ratio:

Account Receivable Turnover Ratio:

Net sales / Account receivable

This ratio measures how many times a company is able to collect its accounts receivables during a year, higher
the ratio the better it is for a company to collect its receivables.

For FY 2021 PepsiCo was able to collect its receivables 9.30x. For FY 2022 it was able to collect its receivables
9.17x,we expect the ratio to be constant for the forecasted period as well at approx. 8.71x.

Account Receivable Turnover (Days):

365 days / Account Receivable

This number helps us see how quickly a company gets paid by its customers compared to the time it allows them
to pay. Normally, the industry average is 45 days, but PepsiCo is doing even better by getting its money in about
39.8days since 2022.
 Inventory Turnover Ratio:

Cost of goods sold / Inventory

This number shows how many times a company can sell and replace its products compared to how much it spent
on making them. For PepsiCo, this number is usually around 18.6X which is higher than the industry average of
11.3X This means PepsiCo is really good at selling and replacing its products, leading to strong sales.

Account Payable Turnover Ratio:

Cost of Goods sold / Account Payable

This looks at how many times a company can pay its bills in a certain time. In 2021 the ratio was 3.90 times, in
2022 it went up to 3.88 times. which was higher than the industry average of 0.9x.

Account Payable Turnover (Days):

From 2020 to 2025, PepsiCo's Accounts Payable Turnover Ratio in days shows consistent figures around 96 days,
with minor fluctuations. This indicates that the time taken to pay off accounts payable has remained stable.
Overall, PepsiCo has managed its payables efficiently and consistently over this period.

Leverage Ratio:

Debt to Equity Ratio: Total Debt / Total Equity

It is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a
company's assets. It is calculated by dividing Total debt with total equity of the company

Company avg. Debt to Equity Ratio is 2.38x (2021 to 2022) against Industry average of 2.3x. Hence it is Better.

Debt to Capital Ratio: Total Debt / (Total debt + Total Equity)

The company's debt-to-capital ratio, indicating the portion of its funding coming from debt, was 0.40% in 2021,
slightly decreasing to 0.42% in 2022. PepsiCo expecting 0.38% for the year 2023, which is good. It means the
company might depend less on debt, showing a healthier money situation and a plan for a more balanced way
of getting funds.

Interest Coverage Ratio: NOPAT / Interest Expenses

From 2020 to 2025, PepsiCo's Interest Coverage Ratio is consistently negative, ranging from -5.27x to -11.40x. This
suggests that the company's earnings are insufficient to cover its interest expenses, indicating potential financial
stress or significant debt obligations. The stability in the negative ratio highlights ongoing challenges in meeting
interest payments
Market Value Ratios:

EV/Net Profit:

No of Share outstanding * Current Market Price + long term debt + short term debt + Preference Share
+ Noncontrolling interest – Cash & Cash equivalent - Investment / Net Profit

This ratio shows how much enterprise value is created for each dollar of net profit earned. For Nike, the ratio
was 30.99x in FY 2020. It increased to 34.08x in FY 2021 and further to 30.76x in FY 2022, driven by a substantial
rise in net profit. We anticipate the ratio to be around 23x to 27x approximately for the upcoming period. This
expectation is based on an increase in net profit and a higher price per share, signaling a more positive outlook.

EV/Sales:

EV per dollar of sales, higher the ratio more expensive the company is. From FY 2021 the ratio is situated in the
ranges of 3.29x to 3.20x (for the forecasted period we estimate it to be in the same range), still well below the
industry average of 3.3x.

EV/EBITDA:

The EV/EBITDA ratio is a popular metric used as a valuation tool to compare the value of a company, debt included,
to the company's cash earnings less non-cash expenses. It is calculated by dividing the EV by EBITDA of company.

Company avg. EV/EBITDA is x and 20.7x (2021 to 2022) against Industry average of 19x. Hence it is poor.

PE Ratio:

Price Per Share / Earning Per Share

Shows what the investor is willing to pay today for a stock based on its past or future earnings. As of FY 2022 the
ratio is 27.23x, meaning the market is willing to pay 27.23 times PepsiCo earnings. We expect the future period
under

PB Ratio:

Price Per share / Total Asset – Total Liability

Shows the value given by market for each dollar of the company’s net worth. For FY 2021 the ratio was 14.07x,
and for FY 2022 it was 14.03x. And it is expected to be 8.68X for the forecasted period.
DuPont Analysis:

For 3 Stage DuPont Analysis ROE is broken down into:

Net Profit Margin: Net profit a company is able to generate from its revenue.
Asset Turnover Ratio: How efficiently company is able to use its asset to generate revenue.
Leverage Multiplier: How much amount of debt a company uses to finance its assets.

For Nike, the net profit margin slightly increased from 10.2% in FY 2020 to 10.4% in FY 2022. However, the
assetturnover ratio increased from 0.90 in FY 2020 to 0.94 in FY 2022, indicating that Nike has become more
efficientin using its assets to generate sales over the years. The leverage multiplier decreased from 5.28 in FY
2020 to 5.74in FY 2022, aligning with the company's reduction of debt. Despite these changes, the return on
equity, ROE increasing from 48.3% in FY 2020 to 55.6% in FY 2022. Analyzing the net profit margin in more
detail, it isevident that both the interest burden and tax burden increased significantly due to the decreasing
debts and growing profits annually. Additionally, the EBIT margin experienced a decrease of approximately
12.9% from FY2020 and FY 2022 is 12.4%. Considering these factors, the expectation is that the company will
continue to generate increasing returns on equity, ranging from 43% to 31% for the forecasted period.
 Valuation

We have used two valuation method for Nike’s stock valuation namely:

1. Discounted Cash Flow

2. Relative Valuation

Discounted Cash Flow (DCF):

Discounted cash flow (DCF): valuation is a type of financial model that determines whether an investment is
worthwhile based on future cash flows. A DCF model is based on the idea that a company's value is determinedby
how well the company can generate cash flows for its investors in the future.

DCF its drive intrinsic Value of the Company based on Future Free Cashflow or Fundamental Value of the
Company.

It is helps to Identify the Fare Value of the Company.

It’s used to calculate the actual intrinsic value of company so the it helps to the investor to make the investment
decision with comparison with current market price.

PepsiCo NOPAT decreased from $7.1billion to $8.9 billion (FY 2020 to FY 2022). Based on our estimates Nike’s
NOPAT will be $9,427 million for FY 2023, $ 9,898 million for FY 2024 and 10,393 million for FY 2025.
Depreciation and amortization were all in line for FY 2020 till FY 2022. However, as PepsiCo investment in fixed
assets to grow its business and we expect average capex to be around $2730 million for the forecast which was
earlier $5,207 million in FY 2022.

Working Capital is expected to be in range of $2400 million to $170 million for the period of FY 2020 to FY 2022.
As PepsiCo business model is built to deliver balanced top- and bottom-line growth and value creation. We rely
onthe continued growth and success of existing brands and products, as well as the creation of new innovative
products and brands. We offer products in markets and industry segments that are highly competitive.

Based on this we have used 1st Stage DCF valuation model. For the growth stage we have estimate that FCFF to
grow at an overall rate of 10.81% over a period of 3 years on an average after the explicit forecast period of 3
years. For the maturity we estimate PepsiCo to grow at rate of 5.81% for forecasted period. We have considered
the 8years at the end of which we have computed the terminal value. we have discounted the FCFFs including
the Terminal Value using the WACC for the company which is 6.63%. After thereby arriving at the NPV of
enterprise and computing present value for equity, we arrived at the intrinsic value of PepsiCo share which
equals $196.47.

The CMP being 167 PepsiCo share is currently undervalued by 17.6% according to the DCF model of valuation.
Relative Valuation:

Relative Valuation: For comparable company analysis we have valued Nike, Inc. company using the leading
companies from the Footwear and accessories sector that are listed below:

1. Coca cola company.

2. Unilever (UL).
3. Nestle (NESN).

• However, PepsiCo has dominant position in Footwear and Accessories Industry.

• We figured out the PE ratio, PB ratio, and Market Price (calculated from EV/EBITDA) for PepsiCo
competitors using their financial data for the past twelve months in the fiscal year 2022. By finding the
median of these ratios, we determined an industry average. To estimate Nike's fair price, we used the
weighted average method. This involved multiplying each ratio (including the DCF figure) by its
respective weight and then adding them up. The resulting target price was 201.74, lower than the current
market price (CMP) of 165.38. In simple terms, this relative valuation suggests that Nike might be an
undervalued, approximately by 22%.
 Recommendation:

Age groups (24-39 and 9-24 years old, respectively) make up a significant portion of PepsiCo customer base.
Theyare known for their interest in Backed by taste preferences and consumer insights, PepsiCo portfolio ranges
from Pepsi, the refreshing voice of the generation; Mountain Dew, conquering courage with each swig; Slice and
Tropicana, While PepsiCo offers premium products, they also have a range of accessible options appealing to
middle-incomeearners seeking quality and brand recognition.

PepsiCo, Inc. should ensure a diverse range of products and a strong market presence. They need to focus on
innovation, manage costs efficiently, explore new markets, be cautious with debt, and incorporate sustainable
practices to align with consumer preferences and foster long-term success.

Working on sustainability and green marketing It can improve its brand image in the market.

PepsiCo should work on to increase their revenue from Asia Pacific & Latin America.