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Varun Beverages, the bottler for PepsiCo products, reported a strong performance in the June quarter, posting a 26% year-on-year increase in its consolidated net profit, reaching Rs 1,253 crore. This surpasses Bloomberg consensus estimates, which had predicted a profit of Rs 1,276 crore. The company operates on a January-December accounting year.
The impressive profit growth was driven by a significant rise in consolidated revenue, which jumped 28.7% year-on-year to Rs 7,334 crore. This strong revenue performance was primarily attributed to robust growth in India, where volumes surged nearly 23% compared to the previous year. The extended heatwave across the country contributed to increased demand for beverages. However, international volumes remained relatively flat due to a portfolio transition in Zimbabwe, a key market for the company.
Varun Beverages also saw a substantial increase in consolidated sales volume, which grew by 28.1% year-on-year to 401.6 million cases in the June quarter. This includes 28 million cases from BevCo, a South African bottler that Varun Beverages acquired during the period.
Earnings before interest tax depreciation and amortisation (Ebitda) also exhibited strong growth, increasing by 31.8% year-on-year to Rs 1,991 crore, exceeding Bloomberg consensus estimates of Rs 1,976 crore. The Ebitda margin improved by 70 basis points to 27.2% in the June quarter, driven by a notable increase in gross margins (up 220 bps to 54.7% compared to last year).
In a move aimed at encouraging wider retail participation, Varun Beverages announced a stock split on Tuesday in the ratio of 2:5. This decision, subject to shareholder approval, is expected to make the company's shares more accessible to a broader range of investors. The company also declared an interim dividend of Rs 1.25 per share for its shareholders.
Ravi Jaipuria, chairman of Varun Beverages, expressed his optimism about the company's future prospects, stating that the strong June quarter performance puts them on track to achieve healthy double-digit growth in the current calendar year. He highlighted India's high demand for beverages, driven by a growing consumer class and a young population, as a key factor in their growth strategy.
Despite the positive financial performance, the company's share price experienced a decline of 6.38% on the BSE on Tuesday, closing at Rs 1,576.45 apiece. This follows a four-day rally of nearly 9% in the stock's price.
Source: Varun Beverages June quarter profit up 26%; firm announces stock split