Varun Beverages Q2 profit surges 25% to ₹1,262 cr; announces stock split

Beverages maker Varun Beverages Lt has reported a 25.5% increase in net profit at ₹1,262 crore in Q2 CY2024 from ₹1,005.4 crore in Q2 CY2023, driven by volume growth and improved margins.

The company's revenue from operations grew by 28.3% YoY to ₹7,196.8 crore in Q2 CY2024 as compared to ₹5,611.4 crore in Q2 CY2023.

Varun Beverages, which follows a January-December calendar year, says its consolidated sales volume grew 28.1% to 401.6 million cases in Q2 CY2024 from 313.5 million cases in Q2 CY2023. This includes 28 million cases from BevCo during the quarter.

Its India volumes grew 22.9% while international volumes (before BevCo volumes) were almost flat, primarily on account of volumes in Zimbabwe getting affected due to the portfolio transition to zero sugar without affecting profits.

The company's EBITDA income increased 31.8% to ₹1,991.2 crore from ₹1,511 crore in the year-ago period. The gross margins improved 222 bps to 54.7% from 52.5% during Q2 CY2024, primarily due to timely procurement and storage of PET chips to avail pricing benefits as well as the focus on reducing sugar content and lightweight of packaging. EBITDA margin improved 74 bps to 27.7% in Q2 CY2024, led by higher gross margins.

Around 46% of Verun's consolidated sales volumes came from low-sugar or no-sugar products in H1 CY24. In the first half of the fiscal year, Varun's revenue grew 21.1% YoY to ₹11,514.1 crore compared to ₹9,504.3 crore in H1 2023. EBITDA increased 29.1% to ₹2,979.9 crore in H1 2024 from ₹2,309 crore in H1 2023. PAT was higher by 25.3% to ₹1,809.8 crore in H1 2024 vs ₹1,443.9 crore in H1 2023.

Ravi Jaipuria, Chairman, Varun Beverages Ltd, says the company is on track to deliver double-digit growth in this calendar year. "India remains a high-demand market with massive growth potential, driven by a growing consuming class and a young population. To capitalise on this demand, we are focused on further strengthening our infrastructure, distribution network, and product portfolio."

Varun's board has approved an interim dividend of 25% of the face value, i.e., ₹1.25 per share. "Total cash outflow would be ~₹1,624.30 mn."

Additionally, the board recommended the subdivision or split of existing equity shares of the company from 1 equity share with a face value of ₹5 each fully paid-up into such number of equity shares having a face value of ₹2 each fully paid-up. This is intended for wider retail participation.

Varun manufactures, bottles and distributes beverages, and is the largest bottling company of PepsiCo's beverages in the world outside the U.S. Varun Beverages shares are trading 5.53% down at ₹1,590.65 on the BSE today.