Conference Call with Varun Beverages Management and Analysts on Q1CY25 & Full Year Performance and Outlook. Listen to the full earnings transcript.
Food & Beverages company Varun Beverages announced Q1CY25 results Financial Highlights: Revenue from operations (net of excise / GST) grew by 28.9% YoY to Rs 55,669.4 million in Q1CY25 as compared to Rs 43,173.1 million in Q1CY24. Consolidated sales volume grew by 30.1% to 312.4 million cases in Q1CY25 from 240.2 million cases in Q1CY24 driven by strong organic volume growth of 15.5% in India and in-organic volume contributions from South Africa and DRC. Net realization per case increased by 1.8% in India and remained flat in international markets (ex. South Africa). There is a decline of 0.9% in net realization per case at the consolidated level because of lower realization in own brands in the South African market. South Africa achieved 141 million cases in the trailing four quarters, reflecting ~13% growth over the same period last year. Due to relatively lower margin profile of owned brands in the South African market and the higher mix of CSD in India, Gross margins stood at 54.6%, a decline of 171 basis points as compared to Q1CY24. CSD constituted 75%, NCB 7% and Packaged Drinking Water 18% in Q1CY25. In Q1CY25, the mix of Low sugar / No sugar products increased to ~ 59% of consolidated sales volumes. EBITDA increased by 27.8% in Q1CY25 to Rs 12,639.6 million from Rs 9,887.6 million in Q1CY24 in-line with Net Revenue growth. EBITDA margins in India improved by 111 bps on account of operational efficiencies from robust volume growth. EBITDA margins marginally declined at the consolidated level by 20 bps because of the lower profitability in South Africa market @ 14.4% and its higher mix in the Q1CY25.. PAT increased by 33.5% to Rs 7,313.6 million in Q1CY25 from Rs 5,479.8 million in Q1CY24 driven by robust volume growth and lower finance cost. Depreciation increased by 45.3% on account of commissioning of new plants of last year (Supa, Gorakhpur and Khordha) which were not present in the base quarter and consolidation of SA & DRC in the current quarter. Post repayment of debt through QIP proceeds, finance cost in India is negligible and there is interest income of Rs 108 million during the quarter.. Interest cost in international markets is primarily in South Africa which also includes the lease rentals under Ind AS 116 of Rs 86 million as the manufacturing facilities in South Africa are on lease. Ravi Jaipuria, Chairman, Varun Beverages, said: "We are pleased to report a strong operational and financial performance in the first quarter of CY25. Consolidated sales volumes grew by 30.1% YoY, driven by healthy organic volume growth of 15.5% in India. The integration of the SA territory has progressed well, with focused efforts on strengthening on-ground infrastructure, streamlining operations, and enhancing execution across the market. We achieved 141 million cases in SA over the trailing four quarters, marking a growth of ~13% over the same period last year. Historically, net realizations in SA are lower due to a higher mix of own brands; however, we are actively working to scale PepsiCo’s portfolio, which is expected to support improvements in realizations and margins going forward. We recently commenced operations at our new greenfield production facilities in Kangra (Himachal Pradesh) and Prayagraj (Uttar Pradesh), significantly enhancing capacity concurrently with the peak summer season. The implementation of other two greenfield production facilities scheduled for 2025 season in Bihar and Meghalaya is on track and shall commence the commercial production very soon. Additionally, we have established backward integration facilities at Prayagraj and DRC, further strengthening our operational backbone and supply chain efficiency. Building on our nascent presence in the snack food segment, we have initiated the distribution and sale of PepsiCo’s snack products in Zimbabwe and Zambia. These markets present a significant growth opportunity within the packaged foods category, supporting our focus on portfolio expansion across high-potential regions. In-line with our dividend policy, the Board of Directors has approved an 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. Looking ahead, we see immense headroom for growth in India’s beverage market, supported by rising per capita incomes, accelerating urbanisation, expanding electrification, and improving cold-chain infrastructure. With adequate capacities in place, a diversified product portfolio, and a strengthened distribution network, we remain well-positioned to capitalise on these opportunities and deliver sustainable value to all stakeholders.” Result PDF