Varun Beverages (VBL) Q2 2024 earnings summary

Executive summary

• Achieved consolidated sales volume growth of 28.1% year-over-year in Q2 2024, with India contributing 22.9% growth and international volumes flat due to seasonality and portfolio transition.

• Consolidated revenue from operations for Q2 2024 was ₹73,336.72 million, up from ₹58,688.36 million in Q2 2023, reflecting strong year-over-year growth.

• Net profit after tax for Q2 2024 stood at ₹12,618.34 million, a significant increase from ₹8,679.72 million in Q2 2023.

• Expanded partnership with PepsiCo to include exclusive snack franchising in Zimbabwe and Zambia, and commenced production at a new greenfield facility in DRC.

• Board approved an interim dividend of ₹1.25 per share and recommended a stock split to enhance retail participation.

Financial highlights

• Q2 2024 net revenue rose 28.3% year-over-year to INR 71,968 million; EBITDA increased by 31.8% to INR 19,912 million, with EBITDA margin improving by 74 bps to 27.7%.

• PAT increased 25.5% year-over-year to INR 12,618 million in Q2 2024.

• Gross margin improved by 222 bps to 54.7%, aided by procurement and packaging efficiencies.

• Net debt rose to INR 58,808 million as of June 30, 2024, up from INR 47,345 million at year-end 2023, due to CapEx and BevCo acquisition; debt-equity ratio at 0.67 and debt-EBITDA at 1.37x.

• Working capital days increased to 33 from 21 year-over-year, mainly due to PET chip inventory and new market expansions.

Outlook and guidance

• Management expects to maintain healthy double-digit growth for the full year, with India and consolidated performance both expected to deliver double-digit growth despite seasonality and weather impacts.

• CapEx for 2024 is expected to remain at INR 36,000 million, with INR 25,000–26,000 million planned for 2025, focused on greenfield facilities and snack manufacturing in Africa.

• Expansion into new geographies and product lines, including snacks in Zimbabwe and Zambia, is expected to drive future growth.