Earnings Outlook
Early monsoon to hit Varun Beverages revenue, PAT
This story was originally published at 20:06 IST on 28 July 2025
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By Rizwan Ali
MUMBAI – Varun Beverages Ltd. is expected to report a slower earnings growth for the June quarter as sales of carbonated drinks were hit by early onset of monsoon rains. Apart from this, unseasonal rains also disrupted the summer season, affecting demand for soft drinks. As a result, the company's net sales are expected to grow the slowest in the last 19 quarters.
Varun Beverages is expected to post a net profit of INR 12.04 billion for the June quarter, down 4% on year, according to the average of eight analysts' estimates. The highest estimate of net profit of INR 13.85 billion is from Antique Stock Broking Ltd. and the lowest estimate of INR 10.98 billion is from Kotak Institutional Equities.
The company is expected to post a muted growth in net sales at INR 72.25 billion, marginally up, according to the estimates. In the base quarter, the company's revenues had grown 28% on year. The highest estimate for the company's net sales is INR 77.83 billion from Antique and the lowest estimate is INR 69.17 billion from Kotak Equities.
The slowdown in net sales was due to the early onset of the monsoon, unseasonal rains, and a tepid summer, which affected demand for carbonated drinks. This year, the southwest monsoon set in over Kerala on May. 24, much earlier than the usual date of Jun. 1. This was the earliest onset of the monsoon since 2009.
Varun Beverages is expected to report an earnings before interest, taxes, depreciation, and amortisation of INR 18.73 billion for the June quarter, down 6% on year. The highest estimate for EBITDA of INR 21.15 billion is from Antique and the lowest estimate of INR 17.44 billion from Kotak Equites.
The company's gross margin is likely to decline by 20 bps to 54% and its EBITDA margin is likely to decline by 245 bps to 25.2% on year, Kotak said. The decline in EBITDA margin is mainly due to adverse operating leverage.
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.
The company is expected to deliver overall volume growth of 9% on year for the June quarter. While volume growth in India was affected by the early monsoon, demand for carbonated drinks was high in the company's global markets. Varun Beverages' acquisition of BevCo of South Africa and commercialisation of the Congo plant are driving growth in the global market, Antique said.
The company sold 1.12 billion cases of soft drinks in 2024 globally, up 23% from 913 million cases in 2023. A unit case is equal to 24 bottles of 237 ml each.
The company's sales rose to 312 million cases in Jan-Mar of 2025, up 30% from 240 million cases in the year-ago quarter. The net realisation for the company is expected to decline marginally due to weaker realisation in the domestic market.
Varun Beverages holds franchise rights in nine countries for bottling operations and distribution rights in four. In 2024, its India operations contributed around 72% of its total operating revenue. Varun Beverages follows a calendar year as its financial year.
Monday, shares of Varun Beverages ended at INR 486.75 on the National Stock Exchange, up 2%. The shares have fallen 7% since Apr. 30, when the company had announced its March quarter earnings. The shares are trading 28.5% lower from their all-time high of INR 681 which was on July. 29.
Of the 12 brokerage reports available on the stock with Informist, 10 have a ‘buy' recommendation on the stock with an average target price of INR 667. One has a 'hold' rating and one has a 'sell' recommendation. The company will announce its June quarter earnings Tuesday.
Following are the Apr-Jun earnings estimates for Varun Beverages Ltd. based on reports from eight brokerages in the descending order of the net profit:
Brokerage firms | Net Sales (INR in million) | Net Profit (INR in million) | EBITDA (INR in million) |
Antique Stock Broking Ltd |
77,834.00 | 13,850.00 | 21,148.00 |
Motilal Oswal Financial Services Ltd | 71,969.00 | 13,067.00 | 19,633.00 |
Elara Securities (India) Pvt Ltd |
71,875.00 | 12,355.00 | 19,196.00 |
YES Securities (India) Ltd |
72,553.00 |
11,894.00 |
18,501.00 |
Emkay Global Financial Services Ltd | 70,402.00 | 11,527.00 | 17,721.00 |
JM Financial Institutional Securities Pvt Ltd | 72,487.00 | 11,490.00 | 18,305.00 |
Nuvama Wealth Management Ltd |
71,753.00 |
11,153.00 |
17,938.00 |
Kotak Institutional Equities |
69,167.00 |
10,986.00 |
17,439.00 |
Average |
72,255.00 |
12,040.25 |
18,735.13 |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Akul Nishant Akhoury
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