Varun Beverages shares hit 52-week high on strong Q3

Shares of Varun Beverages, the largest franchisee of PepsiCo outside the U.S., surged as much as 4.69% on Tuesday to hit a 52-week high of ₹989.50 apiece on the BSE, a day after the company reported a 30% increase in profit after tax to ₹514.1 crore in the July to September quarter of CY23, driven by growth in revenue and improvement in margins. The company reported PAT of ₹395.48 crore in the same period last year.

The scrip opened at ₹950 today, up 0.51%, as against the previous closing price of ₹945.10. At 12:42 pm, the share price of the company was trading 4.35% higher at ₹986.25. In contrast to this, the broader BSE Sensex was trading 0.33% or 213.31 points lower at 64,742.61.

During the trading so far, the company’s market capitalisation rose to ₹1.28 lakh crore with 78,931 shares exchanging hands on the BSE as against the two-week average of 1 lakh shares. The company hit a 52-week low of ₹537.78 on November 14 last year. In the past one month, three months and one year, the counter has given 6.32%, 19.83% and 71.31% in returns, respectively.

In the Q3 of CY23, the company’s revenue from operations surged by 21.8% year-on-year to ₹3,870.52 crore as against ₹3,2483.05 crore in the same period last year, led by double-digit growth in the domestic and international market.

The company's EBITDA (earnings before interest, tax, depreciation and amortisation) stood at ₹882.1 crore in the September quarter, up 26.2% as against ₹698.99 crore in the same period last year. The gross margins improved by 163 bps (basis points) to 55.3% in Q3 CY2023 primarily owing to the softening of PET chips prices. EBITDA margins improved by 79 bps to 22.8% in Q3 CY2023 driven by higher gross margins and operational efficiencies.

The consolidated sales volume of the company grew by 15.4% to 220 million cases, as against 190 million cases in Q3 of CY2022. The net realization increased by 5.6% to ₹176.3 per case driven by an increase in realization per case primarily in the international market.

"We have achieved notable progress on the operational front by making significant investments to develop both greenfield and brownfield manufacturing facilities throughout India. In addition, our greenfield facility in DRC is progressing well and is slated to be commissioned in the upcoming months. These strategic efforts are tailored to meet the rising consumption and to capture untapped market opportunities. As part of our commitment to diversifying and enhancing our portfolio, we are also enhancing our capacity for juices and value-added dairy beverages to align with evolving consumer demands," says Ravi Jaipuria, chairman, Varun Beverages. 

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