Varun Beverages Q3 Results: Profit Jumps Nearly 20%, Revenue Growth Remains Modest

Varun Beverages reports a strong 19.5% increase in the third quarter. The net profit rose to Rs 741 crore, even as revenue growth moderated and margins slightly contracted year-over-year.

The company demonstrated resilience by converting modest top-line growth into significant profit expansion, primarily due to factors beyond operational efficiency, given the marginal decline in the operating margin.

• Revenue up 2% to Rs 4,897 crore versus Rs 4,805 crore.

• Ebitda down 0.3% to Rs 1,147 crore versus Rs 1,151 crore.

• Margin at 23.4% versus 24%.

• Net profit up 19.5% to Rs 741 crore versus Rs 620 crore

The company's net profit surged by 19.5% to Rs 741 crore in the third quarter, up from Rs 620 crore in the same quarter last year. While the revenue recorded a marginal 2% increase, rising to Rs 4,897 crore from Rs 4,805 crore year over year.

Despite the growth in profit, the operational performance remained essentially flat, with Ebitda slightly declining by 0.3% to Rs 1,147 crore from Rs 1,151 crore in the previous year.

Consequently, the Ebitda margin saw a minor contraction to 23.4% from 24% year over year, suggesting that the profit boost was likely driven by lower tax rates, reduced interest costs, or other non-operational income or expenses.

Further, Varun Beverages Ltd. will now become an alcoholic drink company. The board on Wednesday approved plans to add an alcoholic beverage business in the Main Objects of the Memorandum of Association of the company.

"In response to the growing popularity of Ready To Drink (RTD) and variety of Alcoholic Beverages, VBL sees an opportunity for expansion into the business of RTD & Alcoholic Beverages of any type or description, including beer, wine, liquor, brandy, whisky, gin, rum, vodka in India & abroad," a statement said.

Certain African subsidiaries of VBL will now test the beer market in their territories and have entered into an exclusive distribution agreement with Carlsberg Breweries A/S for their brand - Carlsberg.