Analyst Concall
Varun Beverages expects double-digit growth for next few yrs
This story was originally published at 18:22 IST on 10 February 2025
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--Varun Beverages: See no issue in achieving double-digit growth next few yrs
--CONTEXT: Comments by Varun Beverages mgmt in post-earnings analyst concall
--Varun Beverages: Soft drink industry growing faster vs other FMCG products
--Varun Beverages on competition: Enough room for everyone in Indian market
--Varun Beverages: Indian market not tapped properly
--Varun Beverages: See no threat to company's growth
By Akshita Kumar
MUMBAI – Varun Beverages Ltd. Monday said it is confident of achieving double-digit growth for the next few years, the management said in a post-earnings conference call with sector analysts. The company also said it does not see any threat to its growth. It said its growth is driven by organic volume growth and improved product mix.
Asked about competition, the managment said there is enough room in the country for everyone to grow. "I think at a point people will get into the habit of drinking and this is going to enhance the market. So the more players, it will be better," the managment said. The company said the Indian market is huge and still to be fully tapped.
During market hours Monday, the PepsiCo franchisee posted a consolidated net profit of INR 1.85 billion, up 40% on year for the December quarter, and higher than analysts' estimate of INR 1.82 billion. The company's consolidated revenue for the quarter was INR 38.18 billion, 40% higher on year and also higher than the Street's estimate of INR 35.83 billion.
The company said the soft drinks industry is growing at a faster pace than other fast-moving consumer goods categories. It said there is a market for low-priced products like Campa and expects it to sustain. Asked about its own product launches, the managment said it launched PepsiCo's Sting Blue as an 'in and out' product, but expects the upcoming drink Sting Gold to stay as a long-term product.
The last couple of seasons were affected by rains or extreme summer, the management said. But due to reports of an early summer, the company said it is seeing healthy growth. "We can never be 100% sure with that capacity utilisation, but we are not going to be short of capacity this year for sure," it said.
The Varun Beverages management said South Africa is a very large market for its modern trade and accounts for almost 45% of its modern trade business. By comparison, India accounts for less than 10% of its modern trade business. Margins from the company's operations in South Africa are lower than its margins in India. But once the company gets into backward integration in a year's time, it is confident that its margins will improve significantly.
The management also said the energy drink market is quite huge in the world. India accounts for just 5% of the total energy drink mix and other countries account for 15-20% of the mix. "So we have a lot of room, we have to keep enhancing this market with different flavours," the management said.
On Monday, shares of Varun Beverages ended 1% lower at INR 548.45 on the National Stock Exchange. End
Edited by Rajeev Pai
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