Varun Beverages Q1 Results: Net Profit Rises 35%, In Line With Streets Estimates

Varun Beverages Ltd. reported a 35% year-on-year rise in net profit for the first quarter of this calendar year. The company follows a January-December period to report its quarterly results.

The Pepsi bottler recorded a consolidated net profit of Rs 726.49 crore for the quarter ended March, compared to Rs 537.27 crore in the same quarter of the previous fiscal, according to its stock exchange notification. This was above Bloomberg's estimates of Rs 741 crore.

The board has also approved an interim dividend of Rs 0.50 per share.

Varun Beverages Q1 CY25 (Consolidated, YoY)

• Revenue up 29.2% at Rs 5,566.94 crore versus Rs 4,317.31 crore (Bloomberg estimates: Rs 5,476 crore).

• Ebitda up 28% at Rs 1,263.96 crore vs Rs 989 crore (Bloomberg estimates: Rs 1,235 crore).

• Margins at 22.7% vs 22.9%.

• Net profit up 35% at Rs 726.49 crore vs Rs 537 crore (Bloomberg estimates: Rs 741 crore).

The company's sales volume saw growth, with consolidated figures up 30.1%. This growth was notably driven by a 15.5% organic volume increase in India and a 13% rise in South Africa. Its South African operations achieved 141 million cases over the trailing four quarters, indicating successful integration of the territory.

However, this strong volume performance was accompanied by margin compression. Several factors contributed to this decline, including the relatively lower margin profile of owned brands in South Africa, a higher proportion of carbonated soft drinks in the Indian market, and a substantial 38% increase in raw material prices.

Varun Beverages reported a 69% decrease in the purchase of stock in trade and a 45.3% rise in depreciation, due to the commissioning of new plants, further impacting profitability.

The company saw 1.8% increase in realisation per case in India, while international markets, excluding South Africa, experienced flat realisations. Overall, net realisation per case at the consolidated level declined by 0.9%. Despite the current margin pressures in South Africa due to a higher mix of own brands, the company expressed optimism for future improvement in both realisations and margins in the region.