Varun Beverages Limited — Q4 FY26 earnings call

Call held 27 Apr 2026

Management summary

Varun Beverages delivered a strong Q1 CY2026, marked by double-digit revenue, volume, EBITDA, and PAT growth. The company benefited from healthy demand, disciplined execution, and strategic international expansion with the acquisition of Twizza and agreement for Crickley Dairy in South Africa. Operational efficiencies and raw material stocking helped mitigate inflationary pressures, contributing to margin expansion.

Highlights

  • Revenue grew by 18.1% YoY to ₹6,574.19 crores, driven by strong volume growth.

  • EBITDA margin expanded by 55 bps to 23.3%, reflecting improved operational efficiencies and gross margins.

  • Consolidated sales volumes increased by 16.3% YoY, with India growing 14.4% and international territories 21.4%.

  • Successful new product launches like 'Ad-Rush' and 'Sting Classic' showing 'phenomenal' demand.

  • Strategic acquisitions in South Africa (Twizza, Crickley Dairy) strengthening international presence and portfolio.

Concerns

  • Realization per case in India declined marginally by 1.5% due to volume growth initiatives like pack upsizing.

  • Aluminium cans shortage impacting 'Ad-Rush' production, though VBL's exposure is low and mitigated by inventory.

  • Increased finance cost by 18% primarily due to the Twizza acquisition.

Key financials

  1. Revenue ₹6,574.19 Cr +18.1%YoY
  2. Consolidated Sales Volume 363.4 million cases +16.3%YoY
  3. EBITDA ₹1,528.93 Cr +21%YoY
  4. EBITDA Margin 23.3%
  5. Gross Margin 55.2%
  6. PAT ₹878.71 Cr +20.1%YoY

What they filed

Q1 FY27: revenue up 13.0%, net profit up 14.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue3,087 2,014 4,053 5,305 3,064 −1%2,135 +6%4,501 +11%5,996 +13%
EBITDA801 323 1,010 1,641 787 −2%325 +1%1,172 +16%1,878 +14%
Net profit492 209 678 1,160 577 +17%261 +25%788 +16%1,324 +14%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Capex ₹500 Cr
    • One new plant in India
    Our CAPEX is not going to be very large this year because we have enough capacity. We are most probably going to only have one plant. Our CAPEX will be less than Rs. 500 crore - Rs. 600 crore this year for India.
  • Debt Debt disclosed
    Finance cost increased by 18%, primarily on account of the acquisition of Twizza in South Africa
  • Dividend ₹0.5/share (interim)
    the Board of Directors has approved an interim dividend of 25% of face value, Rs. 0.50 per share, resulting in a total cash outflow of approximately Rs. 1,691 million.
  • M&A Twizza Acquisition · Closed · Consideration ₹[object Object] (undisclosed)

    strengthening our manufacturing footprint and route-to-market capabilities in Africa's largest soft drink market. The acquisition is expected to generate meaningful operational and commercial synergies over time.

    Expected to generate meaningful operational and commercial synergies over time. Finance cost increased by 18% primarily due to this acquisition. Margins to be corrected.

    We consummated the acquisition of Twizza in South Africa through BevCo, strengthening our manufacturing footprint and route-to-market capabilities in Africa's largest soft drink market. The acquisition is expected to generate meaningful operational and commercial synergies over time... During the quarter, we completed the acquisition of Twizza in South Africa, BevCo, at an enterprise value of ZAR 2,053 million... Twizza, last full year revenue was Rs. 800 crore... On the margins, we think it is a bit too early. Let us take it over properly. It has been 10-15 days only or a month. We are going to correct the margins.
  • M&A Crickley Dairy Acquisition · Pending regulatory · Consideration ₹[object Object] (undisclosed)

    will further strengthen our presence in South Africa, subject to regulatory and other approvals. Across Africa, we continue to build scale in snacks and deepen our presence in high-potential markets, in line with our strategy of broadening the portfolio and strengthening consumer relevance.

    Expected to further strengthen presence and portfolio expansion. Combined revenue with Twizza close to ₹1,000 crores.

    We have also entered into an agreement to acquire Crickley Dairy through BevCo, which will further strengthen our presence in South Africa, subject to regulatory and other approvals... In addition, BevCo entered into a share purchase agreement for the acquisition of Crickley Dairy Proprietary Limited at an enterprise value of approximately ZAR 238 million, including net working capital, subject to regulatory approvals... revenue was about Rs. 160 crore for Crickley. So, about consolidated maybe close to a Rs. 1,000 crore between the two.

Guidance & targets

Volume

  • Volume Growth Volume · next 5-10 years · High confidence double-digits
    We are very bullish on the Indian market, and we believe the growth should continue in double-digits for the next 5-10 years at least... We still believe we can grow in double digits going forward for the next 5-10 years.

    — Ravi Jaipuria

Distribution

  • New Outlets Expansion Distribution · this year · High confidence half a million outlets
    Hopefully this year we might expand half a million outlets.

    — Ravi Jaipuria

Capex

  • Capex for India Capex · this year · High confidence less than Rs. 500 crore - Rs. 600 crore
    Our CAPEX will be less than Rs. 500 crore - Rs. 600 crore this year for India.

    — Ravi Jaipuria

Profitability

  • RoCE for new plants Profitability · High confidence 30%
    Normally we work on a 3-4 year payback. 30% RoCE.

    — Ravi Jaipuria

What to watch in Q1 FY27

Performance of Sting Classic in PET bottles

Next quarter
Current Initial response is fabulous
Target Achieve same success as Sting Red

Why it matters

Indicates success of new product launches and ability to capture market share in the energy drink segment, contributing to overall volume growth.

The new launch of Sting Classic, has started only about a few weeks back, the initial response is fabulous, and we feel it could achieve the same success as Sting Red, hopefully. At the moment, it is looking very positive.

Risks & concerns

  • Inflationary input environment / Higher oil prices

    medium

    Despite inflationary environment, confident in navigating through focused execution, supply chain agility, inventory stocking, cost cutting, and reduced discounts.

    Management acknowledged

  • Unseasonal weather

    medium

    Last year's bad weather in India impacted growth; current summer outlook is positive.

    Management acknowledged

  • Aluminium cans shortage

    low

    VBL has low salience (<2%) for cans, sufficient inventory, and can shift to PET bottles to mitigate impact.

    Analyst acknowledged

Q&A highlights

8 direct
Impact of higher oil prices on packaging material and transportation costs Direct
in our international markets, the impact on raw materials will be practically zero to a couple of points, as we are well-stocked not just for this quarter but for the next quarter as well. We normally carry 6 months inventory in international... As far as India is concerned, we will have a minor effect... we are covering that by reducing our discounts and becoming more efficient... The only thing which can affect us slightly, which you cannot stock, is the transportation cost. There will be some impact, but we will be more than able to absorb it.

Addresses a key macro concern (inflation) and outlines VBL's mitigation strategy (inventory, cost cutting, reduced discounts) for raw materials and transportation.

Asked by Vivek Maheshwari

Realization trend in India (1.5% decline vs 4% last quarter) Direct
Vivek, in fact, we have premiumized a number of products. New launches, along with the growth of around 60% in our dairy segment, where realisations are nearly 3x of the normal level, have helped. Our focus remains on compensating a major part of the impact through the system itself.

Explains the improvement in realization decline, attributing it to product mix (premiumization, dairy growth) and internal efficiencies, despite volume growth initiatives like pack upsizing.

Asked by Vivek Maheshwari

Aluminium cans shortage and VBL's strategy Direct
Well, first aluminium cans sales is less than 2% for us. It is very small. Secondly, we have tied up a reasonable quantity to more than cover up our 2% volumes and even a little higher, so, we will be able to get cans... They are slightly more expensive, but as we said, wherever we are finding a large cost up, we are cutting discounts in the market.

Clarifies VBL's limited exposure to cans, their inventory strategy, and how they manage higher costs (reduced discounts) amidst a market shortage.

Asked by Abneesh Roy

Water segment market share and growth initiatives Direct
No, we do not over-push water. We try and make sure our basic margins remain and we want to make sure our exclusive customers and our visi-coolers... are serviced properly. Water is like a commodity, you can increase your sales as much as you want by offering discounts, which we are not in the game of and that is why we can sustain our margins.

Highlights VBL's disciplined approach to the water segment, prioritizing margins and existing customer service over aggressive discounting for market share.

Asked by Abneesh Roy

Performance of energy drink portfolio (Ad-Rush, Sting Classic) Direct
Ad-Rush' has done phenomenally well. We are feeling some pinch because of the shortage of cans... In can we have launched our new 'Sting Classic' and it is doing extremely well... The new launch of Sting Classic, has started only about a few weeks back, the initial response is fabulous, and we feel it could achieve the same success as Sting Red.

Provides specific updates on new product performance, indicating strong demand for energy drinks despite supply challenges for cans and positive outlook for new launches.

Asked by Abneesh Roy

Granular details on international growth beyond South Africa Direct
No, it is not only South Africa. Actually, all our international businesses have grown... Yes. All international markets, otherwise, we would not be able to average 21.4%. We think Morocco was the only one which was weak last quarter.

Confirms broad-based growth across international markets, not just South Africa, and identifies Morocco as an outlier, providing more granular insight into international performance.

Asked by Anand Shah

Reason for acceleration in 2-year CAGR growth (from 6-8% to 14%) Direct
Well, we think we have never had 6%-8% growth except last year when the weather was really bad and India did not grow. We have been average growing at a CAGR of 23%... It is only last year, India because of the weather, our growth was lower. That is the only reason.

Reaffirms VBL's historical strong growth trajectory, attributing recent lower CAGR to last year's unseasonal weather in India, and expresses confidence in continued double-digit growth.

Asked by Percy Panthaki

Efficiency and payback period of new plants Direct
our plant efficiency being larger plants is much better than what it used to be in the older plants. Just to give you an example, if we had a 200 bottles per minute line, now we have got a 1,000 bottles per minute line and the manpower is the same. It is five times more production but using the same manpower... Normally we work on a 3-4 year payback. 30% RoCE.

Details the significant operational efficiencies gained from larger, newer plants and provides specific financial targets (3-4 year payback, 30% RoCE) for these investments.

Asked by Arjav Jain

2 min read 6 chapters

Detailed narrative

Strong Q1 CY2026 Performance

Varun Beverages reported a robust Q1 CY2026, with consolidated sales volumes growing by 16.3% YoY to 363.4 million cases. Revenue increased by 18.1% YoY to ₹6,574.19 crores, while EBITDA saw a 21% YoY improvement to ₹1,528.93 crores. This led to an EBITDA margin expansion of 55 bps to 23.3% and a PAT growth of 20.1% YoY to ₹878.71 crores, driven by strong volume growth in both India (14.4%) and international territories (21.4%).

India Market Dynamics and Strategy

Demand in India remained encouraging, supported by wide distribution, execution, and investments in manufacturing and chilling infrastructure. The company undertook targeted initiatives including pack upsizing and selective price point launches to drive volumes. Realization per case in India declined marginally by 1.5% due to these volume growth initiatives, but this was offset by premiumization and strong growth in the dairy segment (60-70% growth, 3x normal realizations).

International Business Expansion

The international business continued its steady progress, achieving 21.4% volume growth. Varun Beverages completed the acquisition of Twizza in South Africa for ZAR 2,053 million and entered an agreement to acquire Crickley Dairy for ZAR 238 million, both through BevCo. These acquisitions are expected to strengthen VBL's manufacturing footprint, route-to-market capabilities, and portfolio in Africa, with Twizza's last full-year revenue at ₹800 crores and Crickley's at ₹160 crores.

Product Portfolio and Innovation

The company reported strong performance across its product categories, with CSD constituting 73.6% of total volumes. Low-sugar and no-sugar products now account for approximately 63% of consolidated sales volume. New launches like 'Ad-Rush' and 'Sting Classic' (in cans and PET bottles) are performing 'phenomenally well' and are expected to achieve similar success to 'Sting Red'. Dairy products are growing at 60-70%, and Tropicana PET at over 100%, indicating successful portfolio diversification.

Cost Management and Operational Efficiency

Gross margins improved by 62 bps to 55.2%, supported by early stocking of key raw materials despite an inflationary input environment. The company is actively cutting costs and reducing discounts to offset potential impacts from higher oil prices and transportation costs. New, larger plants are significantly more cost-effective, with a 1,000 bottles per minute line requiring the same manpower as a 200 bpm line, leading to five times more production efficiency. These operational efficiencies contributed to the 112 bps improvement in India's EBITDA margins.

Capital Expenditure and Shareholder Returns

Varun Beverages plans a modest capital expenditure for India this year, targeting 'less than Rs. 500 crore - Rs. 600 crore,' primarily for one new plant, as existing capacities are sufficient. The company aims for a 3-4 year payback period and 30% Return on Capital Employed (RoCE) for new plant investments, leveraging improved efficiencies. In line with its dividend policy, the Board approved an interim dividend of ₹0.50 per share (25% of face value), resulting in a total cash outflow of approximately ₹169.1 crores.

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