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Informist, Friday, Apr. 24, 2026

By Avishek Rakshit

KOLKATA – Late arrival of the summer season is expected to have dented volume growth of aerated beverage makers such as Varun Beverages Ltd. in the March quarter. However, the company's strong performance in its Africa business is expected to support its financial performance for the quarter. Lower sales realisations in the domestic market are also likely to have dented the company's top line.

Varun Beverages is one of the largest global franchisees of US-based PepsiCo, Inc., which primarily sells PepsiCo-licensed products in India and parts of Africa. The company is expected to report an over 4% on-year increase in its consolidated net profit for the March quarter to INR 7.58 billion, according to the average of estimates from six brokerages. The company's consolidated revenue for the reporting quarter is expected to rise over 8% on year to over INR 60 billion, the estimates show. 

Sequentially, the net profit is likely to rise a whopping 201% and the revenue is likely to increase sharply by 43%. The company, which also sells non-carbonated beverages such as packaged drinking water under trademarks owned by PepsiCo, will declare its results for the March quarter on Monday. It follows the calendar year as its financial year. 

Brokerage Emkay Global Financial Services Ltd. has the highest estimate for the company's net profit at just below INR 8 billion and the lowest estimate of INR 7.14 billion is from Nuvama Wealth Management Ltd. Emkay also has the highest revenue estimate at around INR 62 billion and Nuvama has the lowest estimate at INR 57.34 billion.

Cooler temperatures due to the incessant downpour during the quarter lowered the demand for aerated drinks, commonly referred to as carbonated soft drinks. As a result, brokerages are not bullish on domestic sales volume growth in Jan-Mar. Nuvama pegged a mere 3% domestic growth in volume, while JM Financial Institutional Securities Pvt. Ltd. pegged it higher at 8%, and Kotak Securities Ltd. expects it to be a bit higher at 9% on year. 

Kotak Securites expects Varun Beverages' total volume growth, including African operations, at around 11% on year to 346 million cases in the quarter ended March. Varun Beverages' international business is expected to register around 15% on-year volume growth, of which, 11.5% growth will be organic in nature, the brokerage said. Global operations typically account for 31% of the company's total annual sales volume. 

However, the company's realisations from sales in India are likely to decline 4% on year due to upsizing of the 250 ml stock to 400 ml, Kotak Securities said. However, higher sales volume is expected to help Varun Beverages report 5% on-year revenue growth in India. Overseas revenue growth is seen rising 23% on year on account of improved realisations.

Varun Beverages is expected to report an earnings before interest, tax, depreciation, and amortisation, or EBITDA of INR 13.31 billion in the March quarter, according to the average of six estimates. Emkay's estimate for EBITDA is the highest at INR 13.73 billion and Nuvama's estimate of INR 12.73 billion is the lowest.

Nuvama said that packaging cost inflation in the quarter is likely to pressurise margins of beverage companies. But Varun Beverages has procured polyethylene terephthalate inventory at lower costs and holds forward contracts for supply of polyethylene terephthalate bottles ahead of peak summer demand. 

However, Kotak Securities said gross margins are likely to decline 50 basis points to 54.1% and EBITDA margins are likely to fall 65 bps to 22.1% in the March quarter due to the company's upsizing initiatives in India and ramp-up of snacks portfolio in Africa.

Thursday, shares of Varun Beverages ended at INR 490.45 on the National Stock Exchange, up 1.28% from the previous close. The shares are up around 7% since the company announced its December quarter earnings in February.

Of the nine research reports on the company available with Informist, eight have a 'buy' or equivalent recommendation on the stock at an average target price of INR 554 per share. One brokerage has a 'sell' or equivalent recommendation on the scrip at a target price of INR 470 per share. 

Following are the Jan-Mar earnings estimates for Varun Beverages from six brokerages in descending order of the estimate of net profit in INR billion:

End

Edited by Tanima Banerjee

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