Analyst Concall
Varun Beverages rules out major capex in India in next 2 yrs
This story was originally published at 17:20 IST on 29 July 2025
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--Varun Beverages: Don't see any other challenge except rains dampening sales
--CONTEXT: Comments by Varun Beverages mgmt in post-earnings analyst concall
--Varun Beverages: Demand in Zimbabwe stabilised, looking at growth from Jul
--Varun Beverages: South Africa driving co's international ops growth
--Varun Beverages: Current capacity utilisation 70% of installed capacity
--Varun Beverages: Not seeing much capex in domestic ops in next 2 yrs
--Varun Beverages: Looking at expansion, new mkt entry outside India
--Varun Beverages: May not achieve 2025 outlet expansion aim due to rains
By Shakshi Jain
NEW DELHI – Amid a focus on international expansion, Varun Beverages Ltd., one of the largest franchisees of beverages giant PepsiCo Ltd., is not considering any major capital expenditure at home in the next one-two years, a top company executive said Tuesday in a post-earnings conference call. "We are (at) about 70% utilisation of the capacity, so we have enough headroom for the next couple of years. We don't need any major capex in India," the company's management said. Currently, Varun Beverages is actively looking for new acquisitions overseas as part of a bid to expand its presence in international markets, the management added.
Earlier in the day, Varun Beverages reported a 3% on-year decline in its sales volume for the June quarter, primarily due to abnormally high rainfall in India. The company, which does not see consumption demand and rising competition as challenges, remains watchful of monsoon showers in the current quarter as well. Unseasonal rains, which played spoilsport in the June quarter, may keep the company from hitting its retail outlet expansion target for the year, the company said.
"We're at about 4 million outlets and post that, this year's goal was to increase by another 10%, about 300,000-400,000 outlets. Now of course, given that when it rains, rural demand goes down. There are a lot of temporary outlets that open and close...We might not have been able to achieve exactly what we wanted because of the unseasonal rain," the company's management said.
SOUTH AFRICA IN FOCUS
Among international markets which arrested the decline in the company's top line in the June quarter, South Africa remains a key focus area for Varun Beverages, Chairman Ravi Jaipuria said in a presentation to investors. Varun Beverages is presently awaiting approval from the Competition Commission of South Africa for a land parcel purchase adjoining its production facility in Boksburg to further improve capacity and backward integration.
"So, except Zimbabwe, I think all the geographies are doing well. Zimbabwe only temporarily was down because of the sugar tax and the prices going up, which is also starting to bounce back. And South Africa was the highest in the average for the international market," the company's management said.
The company added that consumption demand has stabilised in Zimbabwe and it expects to see growth in this market from the current quarter.
On Tuesday, shares of the company fell sharply post the disclosure of the June quarter results. Shares of the company, however, ended the sesssion 5.2% higher at INR 512.15 on the National Stock Exchange. End
Edited by Tanima Banerjee
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