Earnings Outlook
Varun Beverages Q4 PAT to surge at fastest pace in 8 qtrs
This story was originally published at 19:37 IST on 1 February 2026
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By Akshat Saksena
MUMBAI – Varun Beverages Ltd.'s net profit for the December quarter is expected to surge on year, growing at its fastest in eight quarters, because of lower interest costs, according to brokerages. The company's revenue is expected to rise on year due to growth in volumes in both its domestic and international businesses.
The company is expected to report a consolidated net profit of INR 2.63 billion for the reporting quarter, based on an average of estimates from seven brokerages. This implies a rise of over 42% on year but a fall of over 64% from the September quarter. The highest estimate for the company's net profit is INR 2.77 billion from Nuvama Wealth Management Ltd. and the lowest is INR 2.48 billion from JM Financial Institutional Securities Pvt. Ltd.
Varun Beverages is expected to deliver consolidated revenues of INR 39.91 billion, per the average of estimates. This implies a rise of over 8% on year but a fall of over 18% on quarter. Estimates for the company's revenue range between a high of INR 40.41 billion from JM Financial and a low of INR 39.39 billion from Motilal Oswal Financial Services Ltd.
The beverage company's volumes are expected to rise 9.2% on year to around 235 million cases, according to Kotak Securities Ltd. This rise is expected to be led by an around 8.5% on-year growth in volumes of its domestic business and an around 10.1% growth in volumes of its international business, which is led by mid-teen growth in its South African business, the brokerage said. Kotak Securities expects the net realisations from the company's African business to decline around 0.4% on year. The company's international volumes are expected to rise by a high single digit for the quarter, according to Motilal Oswal.
Nuvama expects the company's domestic business revenues to rise 6% on year, with volumes rising 7% on year. YES Securities (India) Ltd. expects the company's standalone business revenue to rise 7.2% on year on the back of a 2.5% growth in its organic volumes driven by improving weather and seasonal demand.
JM Financial expects the company's domestic volume growth to improve on year. The brokerage's channel checks along with comments from management indicate the residual impact of the cut in goods and services tax on demand is expected to be either stable or improve for beverage companies such as Varun Beverages.
The government has increased GST on aerated drinks to 40% while GST on other beverages have been cut to the lowest rate, with rates on water and juice reduced to 5% from 12%. As food and beverages companies adjusted pricing of their products to make way for the new GST rates from Sept. 22, they were forced to reduce their stock.
"It (GST cut) affected slightly for a few days in the September quarter because a lot of people could not initially understand it and downsized their stock levels. But we were able to make sure that the goods were sent to them after the GST transition date," Varun Beverages Chairman Ravi Jaipuria had told analysts in a conference call after the September quarter earnings. In an interview to CNBC-TV18, Jaipuria had said he expected the reduction in rate, which covers 30% of the company's volumes, to boost demand for its water and juice categories.
The company is expected to report earnings before interest, tax, depreciation, and amortisation of INR 6.36 billion for the December quarter, based on an average of six estimates. This signifies a year-on-year rise of nearly 10% but a fall of nearly 45 % on quarter. The highest estimate for the metric is INR 6.57 billion from Kotak Securities and the lowest is INR 6.17 billion from Emkay Global Financial Services Ltd.
Among the EBITDA margin estimates from four brokerages, the highest is 16.5% by Nuvama while the lowest is 15.7% by JM Financial, with the latter expecting the metric to remain the same as it was for the year ago-quarter. "Stable margins to result EBITDA growth similar to sales growth," the brokerage said. Other brokerages expect a rise in the company's margins, with Nuvama expecting the metric to rise 78 basis points from the previous year owing to operating efficiencies.
Varun Beverages manufactures, distributes and sells carbonated soft drinks along with a section of non-carbonated beverages, which includes packaged drinking water under trademarks owned by PepsiCo. The company is one of the largest franchisee of PepsiCo. in the world outside of the US. The company will announce its December quarter earnings Tuesday.
The company reports its financial results on a calendar year basis as opposed to financial year basis. This makes the Oct-Dec period the fourth quarter of calendar year 2025 for the company.
Out of nine brokerage reports on the company available with Informist, eight have a 'buy' recommendation on the stock, with an average target price of INR 591. This is nearly 26% higher than the current market price. One brokerage has a 'hold' recommendation on the stock.
On Sunday, shares of the company closed slightly lower at INR 469.10 on the National Stock Exchange. The stock has fallen over 5% since the company announced its September quarter earnings on Oct. 29.
The following are the Oct-Dec earnings estimates for Varun Beverages from seven brokerages in descending order by the estimate of net profit in INR billion:
|
Brokerage Firm |
Net Sales |
Net Profit |
EBITDA |
|
Nuvama Wealth Management Ltd. |
39.54 |
2.77 |
6.53 |
|
Elara Securities (India) Pvt. Ltd. |
40.13 |
2.76 |
6.26 |
|
Kotak Securities Ltd. |
40.12 |
2.71 |
6.57 |
|
Mirae Asset Sharekhan Ltd. |
39.55 |
2.62 |
|
|
Motilal Oswal Financial Services Ltd. |
39.39 |
2.59 |
6.29 |
|
Emkay Global Financial Services Ltd. |
40.25 |
2.52 |
6.17 |
|
JM Financial Institutional Securities Pvt. Ltd. |
40.41 |
2.48 |
6.36 |
|
Average |
39.91 |
2.63 |
6.36 |
End
Edited by Ashish Shirke
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