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Informist, Tuesday, Jul. 28, 2026

 

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--Varun Beverages Apr-Jun consol net profit INR 15.21 bln 
--Analysts saw Varun Beverages Apr-Jun consol net profit at INR 15.65 bln 
--Varun Beverages Apr-Jun consol revenue INR 86.51 bln 
--Analysts saw Varun Beverages Apr-Jun consol revenue at INR 86.11 bln 
--Varun Beverages Apr-Jun consol PAT INR 15.21 bln vs INR 13.17 bln year ago 
--Varun Beverages Apr-Jun consol revenue INR 86.51 bln vs INR 71.63 bln 
--Varun Beverages to pay INR 0.50 per share dividend 
--Varun Beverages interim dividend record date Aug 1 
--Varun Beverages Jan-Jun consol PAT INR 23.93 bln vs INR 20.44 bln year ago 
--Varun Beverages Jan-Jun consol sales INR 153.72 bln vs INR 128.43 bln 
--Varun Beverages Apr-Jun consol EBITDA INR 23.43 bln vs INR 19.99 bln YoY 
--Varun Beverages Apr-Jun consol EBITDA margin 27.7% vs 28.5% yr ago 
--Varun Beverages Apr-Jun consol sales volume 466.7 mln cases, up 19.8% on yr 
--Varun Beverages Apr-Jun consol net realisation per case up 1.2% 
--Varun Beverages: EBITDA margin dn YoY due to consolidation of Twizza ops 
--Varun Beverages: Twizza operations currently has lower margins 
--Varun Beverages Apr-Jun net realisation per case INR 175.3 vs INR 173.2 
--Varun Beverages: EBITDA margin in India rose by 38 bps in Apr-Jun 
--Varun Beverages Chairman: India ops volume growth 14.4% on year in Apr-Jun 
--Varun Beverages: Apr-Jun gross margin 55%, up 44 bps on year 
--Varun Beverages: Maintained gross margin despite high raw material costs 
--Varun Beverages: Raw materials stocking aided gross margin in Apr-Jun 
--Varun Beverages: Twizza sales of 11.8 mln cases in Q2 part of intl volumes 
--Varun Beverages: Higher mix of low, no sugar products aid Q2 gross margins

 

By Avishek Rakshit

 

KOLKATA – Improving realisations from sales and higher sales volume growth in India, which account for over 73% of its total business, led Varun Beverages Ltd. to report a June quarter financial performance which was mostly in line with the Street's estimates. The consolidated net profit for the period, however, narrowly missed the Street's view. 

 

Varun Beverages, which is the second largest franchisee of PepsiCo in the world, outside the US with franchise operations spanning across 10 countries and with distribution rights in additional four countries, Tuesday reported over 15% on-year increase in its consolidated net profit for the June quarter at a little over INR 15 billion and missed the Street's view by around INR 44 million. The consolidated revenue for the quarter, increased nearly 21% on year to nearly INR 87 billion as against the Street's estimate of a little over INR 86 billion.

 

The revenue growth mostly came in from increased total sales volume, which rose around 20% on year to 466.7 million cases in the June quarter. Backed by net realisations improving 1.2% on year, the company reported a strong growth in its top line. Although expenses increased by around 23% on year to INR 68 billion in the June quarter, the revenue growth was considerable for the company to register a profit growth nearly in line with the Street's estimates. 

 

In a presentation to investors submitted to the bourses, the company said the consolidated volume growth in the June quarter was driven by 14.4% on-year volume growth in India and 38.4% in its global operations. 

 

Although the summer season started a little late this year, its intensity was high. This led the company to see a healthy volume growth in twenties since the onset of season which start from March onwards except for the month of April which was about flat resulting in overall domestic volume growth for the quarter of 14.4%.

 

The company's sales volumes in international volumes includes 11.8 million cases during the June quarter from the acquisition of Twizza in South Africa and an improvement in sales realisations in Africa led the company to report an overall improvement in sales realisations at a consolidated level in the June quarter.

 

"Our expanded manufacturing footprint, extensive distribution network and continued investments in chilling infrastructure continued to drive growth," Ravi Jaipuria, chairman at Varun Beverages said in the presentation to investors. 

 

In the June quarter, Varun Beverages also extended its exclusive bottling and trademark licence agreement with PepsiCo in India until April 2049 and removed the earlier restriction requiring Varun Beverages to operate solely as a special purpose vehicle for PepsiCo's business. This gives the company operational flexibility and opens up new opportunities for the company in the coming months that can deliver scale and business synergies.

 

"We also entered a strategic alliance with Asahi Group Holdings to introduce the iconic Calpis brand in India, marking our entry into the value-added fermented dairy beverage category," Jaipuria said.

 

The company's gross margins in the June quarter improved by 44 basis points at 55% with higher mix of International business. In India, early stocking of key raw materials and savings in sugar consumption with higher mix of low sugar and no sugar products helped in maintaining gross margins despite the high inflationary raw material environment. During Jan-Jun, the company's mix of low sugar and no sugar products as a percentage to total sales, increased to 73% of its consolidated sales volume.

 

Varun Beverages' consolidated earnings, before interest, tax, depreciation, and amortisation for the June quarter increased 17.2% on year to INR 23.43 billion but the EBITDA margins declined by 76 basis points on year to 27.7% in the June quarter as against 28.5% in the year-ago quarter primarily due to consolidation of the Twizza business in South Africa which currently has lower margins.

In India, EBITDA margins improved by 38 basis points driven by operational efficiencies from healthy volume growth which were partially offset by higher other expenses primarily transportation and distribution costs. While the company's consolidated net realisations from sales per case improved a little over 1% on year to INR 175.3 in the June quarter, it aided gross margins in the June quarter. Despite over 28% surge in its raw material costs to over INR 36 billion in the June quarter, the company was able to further its margins namely on account of higher scale of sales volume. 

 

Depreciation increased by nearly 34% in the June quarter at over INR 4 billion on account of commissioning of new plants in India in 2025 which were not present in the base quarter and on account of acquisition of Twizza in South Africa. At the same time, finance cost increased by nearly 56% on year to INR 569 million on account of acquisition of Twizza in the current quarter.

 

During Jan-Jun, which marks the company's half yearly performance, the net profit increased over 17% on year to nearly INR 24 billion and sales increased nearly 20% on year to nearly INR 154 billion. Varun Beverages follows the calendar year as its financial year. 

 

The company has approved an interim dividend of 25% of face value per share translating into a divided of INR 0.50 per share with the record date being Aug 1. The total cash outflow as a result of the dividend would be around INR 1.7 billion. 

 

"Looking ahead, we remain confident in the long-term growth potential across our markets, supported by favourable demographics, rising disposable incomes and increasing consumption of packaged beverages," Jaipuria said.

 

Earlier this month, VBL Industries (Kenya) Ltd., its wholly-owned subsidiary entered into a business transfer agreement to acquire the business in DFIKL - a promoter group company, for a purchase consideration of INR 3 billion. DFIKL has net revenue of over INR 3 billion and have a product portfolio comprising value added dairy, juices, packaged drinking water, and others. 

 

Shares of Varun Beverages fell after the company declared its June quarter results. At 1323 IST, its shares traded over 7% down at INR 430.00 on the National Stock Exchange. End

 

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

 

Edited by Akul Nishant Akhoury

 

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