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Informist, Tuesday, Jul. 29, 2025

 

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--Varun Beverages Apr-Jun consol net profit INR 13.17 bln 
--Analysts saw Varun Beverages Apr-Jun consol net profit at INR 12.04 bln 
--Varun Beverages Apr-Jun consol PAT INR 13.17 bln vs INR 12.53 bln year ago 
--Varun Beverages Apr-Jun consol sales INR 71.63 bln vs INR 73.34 bln yr ago 
--Varun Beverages to pay INR 0.5 per share 2nd interim dividend 
--Varun Beverages to appoint Pankaj Madan as CFO from Wednesday 
--Varun Beverages to set up JV for mfg visi-coolers, refrigeration equipments 
--Varun Beverages to set up JV with Everest Intl for mfg visi-coolers 
--Varun Beverages to buy 50% stake in JV for INR 212.50 mln 
--Varun Beverages Apr-Jun consol EBITDA INR 19.99 bln vs INR 19.91 bln yr ago 
--Varun Beverages Apr-Jun consol EBITDA margin 28.5%, up 82 bps on year 
--Varun Beverages Apr-Jun consol sales volume 389.7 mln cases, down 3% on yr 
--Varun Beverages Apr-Jun sales volume in India down 7% on year 
--Varun Beverages Apr-Jun international sales volume up 15.1% on year 
--Varun Beverages Apr-Jun consol net realisation per case up 0.5%
--Varun Beverages: Q1 consol volumes dn YoY due to abnormally high rainfall 
--Varun Beverages Q1 consol EBITDA margin up on operational efficiencies 
--Varun Beverages Q1 consol EBITDA margin up on strong currency in intl mkts 
--Varun Beverages Apr-Jun depreciation expenses INR 3.06 bln, up 26% on year 
--Varun Beverages Apr-Jun depreciation cost up on commissioning of new plants 
--Varun Beverages Apr-Jun depreciation cost up on expansion in intl mkts 
--Varun Beverages: Commissioned new production lines at Prayagraj, Damtal 
--Varun Beverages: Commissioned new production lines at Buxar, Mendipathar 
--Varun Beverages: New capacity in India yet to yield incremental volumes 

 

By Simran Rede

 

MUMBAI – Varun Beverages Ltd. reported a rise in its bottom line for the June quarter, against the Street's expectations of a decline. However, the company reported a decline in its revenue for the first time in 20 quarters. While the company beat analysts' estimate for net profit, it was the slowest growth since the March quarter of 2022.

 

Reacting to the weak results, shares of the company fell sharply. The stock was up 1.2?rlier, before falling to a low of INR 481.40, down 1.1% from the previous close. 

 

Varun Beverages' top line for the reporting quarter, excluding excise duty, was INR 70.17 billion, lower than analysts' forecast of INR 72.25 billion and down 2.5% on year. The company reported a consolidated net profit of INR 13.17 billion for the June quarter, up just over 5% on year and slightly higher than the consensus estimate of INR 12.04 billion. 

 

The beverage maker's consolidated sales volume fell 3% on year to 389.7 million cases, primarily due to abnormally high rainfall in India throughout the quarter, the company said in its investor presentation. On the India business front, volumes declined 7.1% on year. Volumes in the company's international business grew over 15% on year and those in South Africa were up over 16% on year. This rise partially offset the overall decline in the company's consolidated volumes. 

 

The company reported a near 4% drop in total expenses at INR 53.61 billion. Of these, the cost of raw materials and other expenses, which has the highest contribution to the total expenses, fell 0.9% and 11.6% on year, respectively. On the other hand, employee benefits and depreciation and amortisation expenses rose 10% and over 26% on year, respectively.

 

The company's depreciation cost for the June quarter rose over 26% on year due to commissioning of new plants in India and the Democratic Republic of the Congo, as well as brownfield expansion in other international markets, the company said. 

 

Consolidated earnings before interest, tax, depreciation, and amortisation rose just 0.4% on year to INR 19.99 billion. The EBITDA margin was up 82 basis points at 28.5% on the back of operational efficiencies and strong currency in international markets. The rise in the company's EBITDA margin was despite an increase in fixed overheads due to new capacity commissioning at four greenfield plants in India, which are yet to yield incremental volumes, the company said.

 

The company's consolidated net realisation per case was up 0.5% during the quarter, driven by a 6.6% improvement in international markets. The contribution of carbonated soft drinks to Varun Beverages' overall portfolio in Apr-Jun was 75%, that of non-carbonated drinks was 7%, and of packaged drinking water 18%. In Jan-Jun, the mix of low sugar or no added sugar products was about 55% of the company's consolidated sales volumes. 

 

The company remained debt-free in the reporting quarter with free cash of INR 5.15 million. CRISIL, an S&P Global Co., has reaffirmed the company's long-term rating for bank loan facilities as CRISIL AAA with a stable outlook.

 

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 has also been granted the franchise for various PepsiCo products for most international markets including Nepal, Sri Lanka, Morocco, Zambia, Zimbabwe, and South Africa. 

 

OPERATIONS, OUTLOOK

Varun Beverages recently commissioned new production lines at Prayagraj, Damtal, Buxar, and Mendipathar. During the quarter, its subsidiary Varun Beverages Morocco SA started commercial production of PepsiCo's snacks product 'Cheetos' in Morocco. 

 

The company will set up a joint venture with Everest Industrial Lanka Pvt. Ltd. to incorporate White Peak Refrigeration Pvt. Ltd. to manufacture visi-coolers and other refrigeration equipments. Varun Beverages will acquire 50% stake in the joint venture for INR 212.50 million. 

 

The company will pay second interim dividend of INR 0.5 per share for the financial year 2025. Additionally, the company will appoint Pankaj Madan as the chief financial officer from Wednesday. 

 

After the announcement of the earnings, shares of the company rose to an over two-month high of INR 507.25. At 1355 IST, the stock was up nearly 4% at INR 505 on the National Stock Exchange.  End

 

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

 

Edited by Avishek Dutta

 

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