Varun Beverages (VBL) Q1 2025 earnings summary

Executive summary

• Achieved strong operational and financial performance in Q1 CY 2025, with consolidated sales volume up 30.1% year-over-year, driven by 15.5% organic growth in India and significant contributions from South Africa and DRC.

• Revenue from operations (adjusted for excise and GST) grew 28.9% year-over-year to INR 55,669 million in Q1 CY 2025.

• EBITDA increased by 27.8% to INR 12,639.6 million; PAT rose 33.5% to INR 7,313.6 million year-over-year, with India margins improving due to operational efficiencies.

• New greenfield production facilities in Kangra and Prayagraj commenced operations, boosting capacity for the peak summer season; Bihar and Meghalaya plants to start soon.

• Initiated distribution of PepsiCo snack products in Zimbabwe and Zambia, expanding the portfolio in high-potential regions.

Financial highlights

• Consolidated sales volumes rose to 312.4 million cases from 240.2 million cases in Q1 CY 2024.

• Gross margin declined by 171 basis points to 54.6% due to lower margin profile in South Africa and higher CSD mix in India.

• Realization per case in India increased 1.8% year-over-year; consolidated realization declined 0.9% due to South Africa.

• Interim dividend of INR 0.50 per share (25% of face value) approved, totaling INR 1,691 million cash outflow.

• Basic EPS (consolidated) for Q1 2025 was ₹2.15, up from ₹1.65 in Q1 2024.

Outlook and guidance

• Management expects continued double-digit growth in India, supported by rising incomes, urbanization, and infrastructure improvements.

• South Africa margins targeted to be maintained at 14% for the year, with further improvements expected as high-margin products scale.

• New product launches (e.g., Sting Gold, Gatorade low-price pack, jeera drink) are in early stages, with more launches planned each quarter.

• Expansion into snack foods in Zimbabwe and Zambia supports portfolio growth in high-potential regions.

• Ongoing investments in new greenfield facilities and backward integration to enhance operational backbone.