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Informist, Wednesday, Apr. 30, 2025

 

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--Varun Beverages Jan-Mar consol net profit INR 7.26 bln 
--Analysts saw Varun Beverages Jan-Mar consol net profit INR 7.36 bln 
--Varun Beverages Jan-Mar consol PAT INR 7.26 bln vs INR 5.37 bln year ago 
--Varun Beverages Jan-Mar consol revenue INR 56.80 bln vs INR 43.98 bln 
--Varun Beverages:Lower prices in South Africa hit consol realisation Jan-Mar 
--Varun Beverages: Organic sales volume in India up 15.5% on yr in Jan-Mar 
--Varun Beverages: Work on production units in Bihar, Meghalaya on track 
--Varun Beverages Jan-Mar consol EBITDA margin 22.7%, down 20 bps on year 
--Varun Beverages Jan-Mar realisation per case in India up 1.8% 
--Varun Beverages Jan-Mar consol net realisation per case down 0.9% 
--Varun Beverages Jan-Mar consol sales volume 312.4 mln cases, up 30% on yr 
--Varun Beverages Jan-Mar consol EBITDA up 27.8% on year 
--Varun Beverages Jan-Mar consol EBITDA INR 12.64 bln vs INR 9.89 bln yr ago 
--Varun Beverages to pay INR 0.50 per share interim dividend 

 

By Anand JC 

 

NEW DELHI – Varun Beverages Ltd. began its financial year on a robust footing as its consolidated sales grew 30.1% on year in the March quarter driven by strong organic volume growth in India and inorganic volume growth overseas. 

 

The company reported a consolidated net profit of INR 7.3 billion for Jan-Mar, up 35% on year and in-line with consensus estimates of INR 7.4 billion. Varun Beverages' top line for the reporting quarter was INR 56.8 billion, higher than analysts' forecast of INR 55.6 billion, and up 29% on year. 

 

The uptick in the bottler's revenue was driven by growth in its consolidated sales volume to 312.4 million cases in the March quarter, from 240.2 million cases in the base quarter. Its India business registered a volume growth of 15.5%. Realisation per case in the domestic business increased 1.8% on year but remained flat in international markets, excluding South Africa. 

 

Varun Beverages, PepsiCo's largest franchisee in India, is involved in production, bottling, marketing, and distribution of a range of beverages under the PepsiCo brand. India remains Varun Beverages' core market, with franchise rights spanning 26 states and six Union territories. Last year, it acquired The Beverage Co. in South Africa, where it manufactures and distributes licensed PepsiCo products.

 

"There is a decline of 0.9% in net realisation per case at the consolidated level because of lower realisation in own brands in South Africa market," it said in an investor presentation. 

 

The company's other income rose sharply to INR 280.6 million from INR 83.5 million a year ago.

 

MARGIN PERFORMANCE

Varun Beverages' earnings before interest, taxes, depreciation, and amortisation, or EBITDA, for the March quarter was INR 12.6 billion, up 28% on year. Its EBITDA in calendar year 2024 was INR 47.1 billion, up 31% on year. The company follows calendar year as its financial year. 

 

The consolidated EBITDA margin for the March quarter was 22.7%, down from 22.9% in the year-ago quarter. While EBITDA margin of its India business improved 111 basis points due to operational efficiencies, its consolidated EBITDA margin fell 20 bps because of lower profitability in South African market and higher mix of products there in the March quarter.

 

The contribution of carbonated soft drinks to Varun Beverages' overall portfolio in Jan-Mar increased to 75% in Jan-Mar, up 400 bps. While contribution of non-carbonated drinks remained unchanged at 7%, that of packaged drinking water fell 4% to 18%. The company is licensed to package Aquafina and Aquavess range of drinking water in India. 

 

Varun Beverages' gross margin fell 171 bps on year in the March quarter to 54.6% due to a relatively lower margin profile of owned brands in South Africa and the higher mix of carbonated soft drinks in India. In the latest quarter, mix of products containing low sugar or no sugar increased to around 59% of its consolidated sales volumes.

 

OPERATIONS, OUTLOOK

Varun Beverages recently commenced operations at its greenfield production facilities in Kangra, Himachal Pradesh and Prayagraj, Uttar Pradesh, ahead of the peak summer season. The company will soon commence commercial production at its greenfield facilities in Bihar and Meghalaya. "Additionally, we have established backward integration facilities at Prayagraj and DRC (Democratic Republic of the Congo), further strengthening our operational backbone and supply chain efficiency," Ravi Jaipuria, chairman of Varun Beverages, said.

 

"Looking ahead, we see immense headroom for growth in India's beverage market, supported by rising per capita incomes, accelerating urbanisation, expanding electrification, and improving cold-chain infrastructure," Jaipuria said. 

 

Total expenses incurred by Varun Beverages for the March quarter were INR 47.3 billion, up 28% on year and 31% sequentially. Growth in expenses was led by cost of materials consumed, and depreciation and amortisation costs. "Depreciation increased by 45.3% on account of commissioning of new plants of last year (Supa, Gorakhpur and Khordha) which were not present in the base quarter and consolidation of SA & DRC (South Africa and Congo) in the current quarter," Varun Beverages said.

 

The company now has a negligible finance cost in India following debt repayment through proceeds from its qualified institutional placement in November. It earned an interest income of INR 108 million in the March quarter. In the international market, Varun Beverages' interest costs are on account of expenses in South Africa. Consolidated financial costs incurred in the reporting quarter stood at INR 411.2 million, down from INR 936.9 million a year ago. 

 

Varun Beverages' consolidated net profit for 2024 was INR 26.3 billion while its revenue was INR 200.1 billion. The top line and the bottom line of the company grew 25?ch from 2023. Its board approved an interim divided of INR 0.50, causing a cash outflow of INR 1.7 billion for the company.

 

Despite tumbling right after results were disclosed, at 1318 IST, shares of Varun Beverages recouped losses to trade unchanged from previous close at INR 529.10 on the National Stock Exchange.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Tanima Banerjee

 

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