PepsiCo bottler Varun Beverages on Wednesday reported a 35.2% rise in its net profit during the January-March 2025 quarter to Rs 726.4 crore, on the back of healthy volume growth. The profit was, however, slightly lower than the Street estimate of Rs 741 crore.
The company’s revenue from operations beat the estimates, rising 29% year-on-year to Rs 5,680 crore from Rs 4,397.9 crore. The Bloomberg consensus estimates had pegged its revenues at Rs 5,476 crore.
The total volumes of the PepsiCo bottler rose by 30.1% to 312.4 million cases. It was driven by growth of 15.5% in India and contributions from South Africa and the Democratic Republic of Congo.
The company’s Ebitda at Rs 1,264 crore also beat the estimates of Rs 1,235 crore during the quarter. However, its gross margins slipped 171 basis points to 54.6% due to lower profitability in South Africa.
According to Ravi Jaipuria, chairman of Varun Beverages, the company sold a higher mix of its own drinks in South Africa. These drinks have a lower margin than PepsiCo’s drinks.
The company, which sells beverages under Pepsi and Tropicana labels, has been expanding its presence in African countries rapidly as it sees high growth potential in the region.
In India, Jaipuria said, the company has a huge room to grow due to rapid urbanisation and rising per capita income. The company’s net realisation per case rose 1.8% in the country.
“We will grow double digits this year,” he said in an investor call after the announcement of the results. While the domestic margins have been slightly lower compared to the previous quarters, the company is focussing on boosting production and expanding its portfolio in the country.
For instance, during the quarter, the company commenced operations at its new greenfield production facilities in Kangra (Himachal Pradesh) and Prayagraj (Uttar Pradesh), ahead of the peak summer season. Moreover, two new greenfield production facilities in Bihar and Meghalaya are likely to commence commercial production soon.
This, Jaipuria said, would support improvements in realisations and margins going forward. He added that the India margins are likely to be in line with the projections of 21%.
Varun Beverages has also initiated the distribution and sale of PepsiCo’s snack products in Zimbabwe and Zambia during the quarter. It announced interim dividend of Re 0.50 per share, resulting in a total cash outflow of around Rs 169.1 crore. The company’s shares closed 1.64% down on Wednesday at Rs 520.3 apiece on the BSE.