PepsiCo bottler Varun Beverages reported a higher-than-expected increase in its net profit during April-June even as revenue fell on account of unseasonal rains dampening sales. The company’s consolidated net profit came in at Rs 1,317 crore against Bloomberg’s estimate of Rs 1,216.3 crore in the first quarter of FY26. This was a growth of 5.1% versus last year, when net profit stood at Rs 1,253 crore.
The company reported a rise in operating profit in contrast to an expected decline, which pushed the stock price to the highest level since May 20 on Tuesday. The stock closed at Rs 512.20 apiece on the BSE, up 5.25% versus the previous day’s close. Varun Beverages follows a calendar year format for financial results reporting.
Margins expand despite dip in revenue and volume
Revenue fell 2.5% to Rs 7,017 crore in the June quarter from Rs 7,197 crore in the year-ago period. In its investor presentation, the company reported a 3% year-on-year decline in consolidated sales volume to 389.7 million cases in the June quarter, down from 401.6 million cases in the same quarter last year.
Bloomberg consensus estimates had pegged revenue for the June quarter at Rs 7,358.9 crore. Earnings before interest, tax, depreciation and amortisation (Ebitda) rose 0.4% to Rs 1,999 crore from Rs 1,991 crore in the year-ago period. Bloomberg consensus estimate had pegged June quarter Ebitda at Rs 1,893.3 crore. Ebitda margins rose to 28.8% from 27.7% last year. Street estimates had pegged Ebitda margins at 25.7% for the period.
The margin expansion was supported by operational efficiencies and favourable currency movements in international markets. Gross margins remained stable at 54.5% during the quarter, its results showed.
International markets shine
Varun Beverages also acquired 50% of the equity share capital of Everest Industrial Lanka, based in Sri Lanka. EIL is engaged in the production, manufacturing, distribution, and sale of commercial visi-coolers and related accessories.
Region-wise, sales volumes in India declined by 7.1%, while international volumes registered robust growth of 15.1%. South Africa alone posted a 16.1% rise, partially offsetting the overall decline in volumes.
The company remained net debt-free during the quarter, maintaining free cash of Rs 514.90 crore. This strong liquidity position has contributed to a healthier balance sheet and ensures readiness for future growth initiatives, it said. ‘Although unseasonal rains have impacted performance during the quarter, we have successfully navigated such challenges in the past and emerged stronger. We continue to strengthen our on-ground execution by adding more visi-coolers and ensuring wider product availability across retail touchpoints,’ Ravi Jaipuria, chairman, Varun Beverages, said.