Varun Beverages Q1FY25 Results Out, Net Profit Up 26%

Varun Beverages announced its Q1FY25 results today. The company reported a consolidated net profit of Rs.1,262 crore for Q1FY2025, marking a significant 26% increase from Rs.1,005 crore in the same quarter last year. This profit growth aligns closely with analysts’ estimates, which had projected Rs.1,275.92 crore.

Revenue and EBITDA

Revenue for the quarter was reported at Rs.7,197 crore, a notable 24% increase from Rs.5,811 crore in the previous year. EBITDA rose by 16.4%, reaching Rs.1,991 crore compared to Rs.1,711 crore in Q1FY2024. However, the EBITDA margin experienced a slight dip, settling at 27.7% compared to 29.9% last year.

Gross Margin Improvement

The company’s gross margins improved, rising by 222 basis points to 54.7% from 52.5% in Q1FY2024 which is  attributed to strategies such as the timely procurement and storage of PET chips, reduced sugar content, and the use of lightweight packaging.

Volume & Sales Performance

In terms of volume growth, India saw an increase of 22.9%, while international volumes (excluding BevCo) remained relatively stable. This stability was mainly due to a decline in Zimbabwean volumes, which were impacted by the shift to a zero-sugar portfolio, although this did not affect overall profits. Additionally, Varun Beverages’ consolidated sales volume surged by 28.1% for Q1FY25.

Dividend & Share Split

The Board of Directors declared an interim dividend of 25% of the face value, which is Rs.1.25 per share. Moreover, a share split proposal was made to reduce the face value from Rs.5 to Rs.2 per share, subject to shareholder approval, aimed at fostering wider retail participation. Despite the impressive financial results, Varun Beverages’ stock experienced a decline of around 5% today.

Conclusion: Varun Beverages’ Q1FY25 results demonstrate strong profit growth and improved margins, reflecting the company’s initiatives. However, the market response has been lukewarm, highlighting a need to focus on leveraging growth opportunities in both domestic and international markets.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.