Varun Beverages Q1: PAT Rises 5% YoY Even as Revenue Dips 2%

PepsiCo’s bottling associate, Varun Beverages, has released its financial results for the first quarter ending June 2025. The company reported a year-on-year (YoY) increase of 5% in its profit after tax (PAT), reaching Rs 1,325.49 crore, compared to Rs 1,261.83 crore from the previous year. However, revenue from operations experienced a drop of 2.3% YoY.

For the first quarter of FY26, revenue from operations was recorded at Rs 7,333.67 crore, down from Rs 7,513 crore in the same period last year.

In comparison to the previous quarter, PAT saw a significant jump of 81.2%, up from Rs 731.36 crore in March.

The company’s Board of Directors also approved an interim dividend of 25% of the face value, translating to Rs 0.50 per share. The total cash outflow for this dividend is expected to be around Rs 169.1 crore.

Operational Performance and EBITDA Margin

During Q2 CY2025, the company’s EBITDA margin rose by 82 basis points YoY to 28.5%, a slight increase from 27.7% in Q2 CY2024. This growth occurred despite higher fixed overheads from newly established greenfield plants in India, which have yet to contribute additional volumes.

The margin increase can be linked to improved operational efficiencies and favorable currency movements in global markets. Gross margins remained steady at 54.5% for the quarter, while EBITDA registered at Rs 1,998.77 crore. Additionally, Varun Beverages acquired 50% of Everest Industrial Lanka (Private) Limited, a Sri Lankan company involved in the production and distribution of commercial visi-coolers and related products.

Sales Volume and Regional Performance

In its investor update, the company highlighted a 3% YoY decline in consolidated sales volume, totaling 389.7 million cases for Q2 CY2025, compared to 401.6 million cases in the corresponding quarter of CY2024. This volume reduction was primarily due to unexpectedly high rainfall across India during the quarter.

Regionally, sales volumes in India decreased by 7.1%, while international volumes gained momentum, seeing growth of 15.1%. Notably, South Africa achieved a 16.1% increase, partially offsetting the overall decline.

Financial Stability and Future Outlook

The company maintained its net debt-free status during the quarter, with free cash reserves amounting to Rs 514.90 crore. This robust liquidity enhances the balance sheet and prepares the company for future growth strategies.

“While unseasonal rains have posed challenges this quarter, we have consistently overcome such issues in the past and emerged stronger. We are dedicated to improving our ground operations by increasing our visi-cooler presence and expanding product availability in retail,” stated Ravi Jaipuria, Chairman of Varun Beverages.

Looking ahead, Varun Beverages expressed confidence in its current operational capacities, an expanding product range, and a focused distribution network, positioning the company to seize opportunities for sustainable long-term growth.

Following the report, Varun Beverages shares rose by 1.5%, reaching Rs 493.95 on the BSE.

(Disclaimer: Individual perspectives and opinions shared by experts are personal and may not reflect those of external sources.)