Varun Beverages shares jump 3% after Q1 PAT rises 15%, revenue grows 20%

Shares of bottle-maker Varun Beverages jumped nearly 3% to the day’s high of Rs 441.80 on the BSE on Wednesday, against previous closing of Rs 430.30, after the company reported a growth of 15% in profit after tax (PAT) and 20% increase in revenue in Q1 FY27 on a year-on-year basis.

According to a filing with the exchange, the company reported a 20.4% year-on-year (YoY) increase in revenue from operations (net of excise duty and GST) to Rs 8,451.23 crore in Q1 FY2027, compared with Rs 7,017.37 crore in the corresponding quarter of CY2025.

Also Read | Varun Beverages shares fall 5% as Q2 margins shrink after Twizza acquisition in South Africa; net profit rises 15%

Profit after tax (PAT) rose 15.1% year-on-year to Rs 1,525.36 crore from Rs 1,325.49 crore, driven by strong volume growth across India and international markets.

Gross margin expanded by 44 basis points to 55% in Q2 CY2026, supported by a higher contribution from the international business. In India, early procurement of key raw materials and lower sugar consumption, aided by a higher mix of low- and no-sugar products, helped offset inflationary pressure on input costs.

Consolidated sales volumes rose 19.8% year-on-year to 466.7 million cases from 389.7 million cases, driven by 14.4% volume growth in India and a 38.4% increase across international markets. The international business included 11.8 million cases from the recently acquired Twizza operations in South Africa.
Depreciation rose 33.6%, primarily due to the commissioning of new plants in India last year and the acquisition of Twizza. Finance costs increased 55.8%, largely on account of the Twizza acquisition.The realization per case for beverages improved by 1.2% at the consolidated level with improved realizations in international territories.

EBITDA increased by 17.2% to Rs 23,430.4 million in Q2 CY2026 and EBITDA margins declined by 76 bps to 27.7% in Q2 CY2026 due to consolidation of Twizza business which currently has lower margins.

In India, EBITDA margins improved by 38 bps driven by operational efficiencies from healthy volume growth which were partially offset by higher other expenses primarily transportation and distribution costs.

VBL India continued to remain net debt free with a free cash of Rs 14,941 million, however, at the consolidated level net debt stood at Rs 3,730 million as on June 30, 2026, on account of acquisition of Twizza in South Africa. The company’s long-term rating for bank loan facilities from CRISIL (an S&P Global Company) is reaffirmed as CRISIL AAA/Stable.

“We are pleased to report a strong performance during this quarter across our markets. Consolidated sales volumes grew by 19.8% and, together with improved realizations, translated into a 20.4% increase in net revenue from operations. EBITDA increased by 17.2% to Rs. 23,430.4 million in Q2 CY2026,” said Ravi Jaipuria, Chairman, Varun Beverages.

Also Read | Varun Beverages’ international fizz outpaces India biz as overseas volumes surge 38%

Jaipuria also mentioned that the company entered a strategic alliance with Asahi Group Holdings to introduce the iconic CALPIS brand in India, marking their entry into the value-added fermented dairy beverage category.

In accordance to their dividend policy, the Board of Directors has approved a second interim dividend of 25% of face value, i.e., Rs 0.50 per share, resulting in a total cash outflow of approximately Rs 1,691 million.

The company has set August 1 as the record date for determining the entitlement of Equity Shareholders for receipt of the second interim dividend.

In the last one year, the stock was down 14.32% and in the last two years, the stock was down 34.84%.

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