Varun Beverages Q2 Results: Profit Rises 26%, Meets Estimates
Varun Beverages saw net profit rise 26% year-on-year to Rs 1,262 crore in the June quarter, against the estimated Rs 1,276 crore.
Varun Beverages Ltd.'s profit rose in the second quarter of calendar year 2024, meeting analysts' estimates.
The company's net profit rose 26% year-on-year to Rs 1,262 crore in the April-June period, according to its exchange filing on Tuesday. This compares with a Rs 1275.92 crore consensus estimate of analysts tracked by Bloomberg.
Varun Beverages Q2 Earnings Highlights (Consolidated, YoY
Revenue up 28.7% at Rs 7,197 crore versus Rs 5611 crore (Bloomberg estimate: Rs 7,344.4 crore).
Ebitda up 31.8% at Rs 1,991 crore versus Rs 1,511 crore (Bloomberg estimate: Rs 1,976 crore).
Ebitda margin at 27.7% versus 26.9% (Bloomberg estimate: 26.9%).
Net profit up 25.5% at Rs 1,262 crore versus Rs 1,005 crore (Bloomberg estimate: Rs 1,276 crore).
Consolidated sales volume grew by 28.1% to 401.6 million cases in the June quarter from 313.5 million cases in in the corresponding period of the previous year. This includes nearly 28 million cases from subsidiary BevCo during the quarter
India volumes grew by 22.9%, while international volumes (before BevCo volumes) were almost flat primarily on account of volumes in Zimbabwe getting affected due to portfolio transition to zero sugar without affecting profits.
Gross margins improved by 222 bps to 54.7% from 52.5% during the period under review primarily due to timely procurement and storage of PET chips to avail pricing benefits as well as the focus on reducing sugar content and light-weighting of packaging.
Key Developments
Varun Beverages began commercial production of carbonated soft drinks and packaged water in capital city Kinshasa of Democratic Republic of Congo on July 22, 2024. The facility features two PET lines with a capacity of 550 bottles per minute each.
The company also entered exclusive snacks franchising with PepsiCo for Zimbabwe and Zambia. The deal between Varun Foods (Zimbabwe) and Varun Beverages (Zambia) with PepsiCo's Premier Nutrition Trading LLC is to produce, distribute and sell "Simba Munchiez" in the African countries.
Each location will receive an estimated investment of $7 million (Rs 60 crore), with an annual capacity of approximately 5,000 MT. These facilities are expected to be operational by Oct. 1, 2025, in Zimbabwe and April 1, 2026, in Zambia.
Shares of Varun Beverages were trading 5.54% lower as of 12:54 p.m., coming off the intraday low of 6.54%, against a 0.42% rise in the benchmark NSE Nifty 50.
Varun Beverages Announces Share Split
Along with the results, Varun Beverages proposed a share split. The board has approved the split of existing shares with a face value of Rs 5 each into shares with a face value of Rs 2 each, subject to the approval of the company's equity shareholders. The company will announce the record date for the share split after receiving the necessary shareholder approvals.
This stock split aims to increase retail participation by making the shares more accessible to a broader investor base, said Ravi Jaipuria, chairman of Varun Beverages.
Dividend Of Rs 1.25 Announced
In addition to the share split, Varun Beverages has also declared an interim dividend of Rs 1.25 per share. The interim dividend will be disbursed starting Tuesday, Aug. 13, 2024, to eligible shareholders as of Aug. 9, 2024.
This interim dividend payment will see a total payout of Rs 162.43 crore, according to the company's announcement.
