Varun Beverages Stock Surges 4% Following 81% Sequential Q1 Profit Rise

Shares of Varun Beverages experienced a rise of 4.3% on Wednesday, peaking at Rs 534 on the BSE. This uptick follows the announcement of an impressive 81.2% sequential increase in profit after tax (PAT) for the first quarter of FY26, alongside a 5% year-on-year (YoY) surge to Rs 1,325.49 crore. Notably, revenue faced a decline while domestic sales volumes showed signs of pressure.

The company’s PAT rose from Rs 1,261.83 crore in Q1 FY25 and showed a significant increase from Rs 731.36 crore in the previous March quarter. However, revenue from operations dipped 2.3% YoY, settling at Rs 7,333.67 crore compared to Rs 7,513 crore.

In its Q1 FY26 results released on Tuesday, Varun Beverages also announced an interim dividend of 25% of the face value, amounting to Rs 0.50 per share. This decision translates into a cash outflow of about Rs 169.1 crore.

Margin Expansion and Operational Efficiency

Despite a reduction in top-line growth, the company achieved a stable gross margin of 54.5%. In addition, it reported an EBITDA of Rs 1,998.77 crore, with the EBITDA margin expanding by 82 basis points YoY to 28.5% in Q2 CY2025, up from 27.7% in the same quarter last year.

This margin growth was notable even with the increased fixed overheads stemming from new capacities at four greenfield plants in India. The company attributed this success to operational efficiencies and favorable currency movements in international markets.
Sales volume in India fell by 7.1%, while international markets exhibited strength with a 15.1% rise in volumes. South Africa led the overseas performance with a 16.1% growth, which helped mitigate the overall drop in domestic sales.
Varun Beverages maintained a solid financial position, concluding the quarter net debt-free with free cash totaling Rs 514.90 crore.